The World Isn't Prepared for Retirement (bloomberg.com) 320
An anonymous reader writes: Most online quizzes are relatively mindless, promising to reveal which vegetable, sandwich or rock band best represents your personality. That was not the case for a short online test given to 16,000 people in 15 countries this year. It revealed just how unprepared a good chunk of the world is for retirement. The three-question test, given as part of the Aegon Retirement Readiness Survey 2018, measured how well people understand basic financial concepts. Many of the participants failed the quiz, with big potential consequences for their future security.
Beyond the sobering lack of financial literacy, there were some rather curious data in Aegon's annual survey, published on Tuesday. For example, some 20 percent of workers surveyed in China envisioned spending retirement with a robot companion. But before we get to that, take a look at this question -- which only 45 percent of people around the world got right: Q. Do you think the following statement is true or false? "Buying a single company stock usually provides a safer return than a stock mutual fund."
The possible answers? True, false, do not know and refuse to answer. Sixteen percent of people got it wrong. "Do not know" was chosen by 38 percent. In the U.S., 46 percent of workers got it right. Good for you, America -- though Germany beat you handily. (The answer, in case you were wondering, is false.) It was an inflation question that had the highest percentage of wrong answers, however. More than 20 percent of workers didn't grasp how higher inflation hurts their buying power. Given that declining health was the most-cited retirement worry, at 49 percent, and health care is an area (in the U.S., especially) with high cost inflation, well, that makes the subject something older folks should have down cold.
Beyond the sobering lack of financial literacy, there were some rather curious data in Aegon's annual survey, published on Tuesday. For example, some 20 percent of workers surveyed in China envisioned spending retirement with a robot companion. But before we get to that, take a look at this question -- which only 45 percent of people around the world got right: Q. Do you think the following statement is true or false? "Buying a single company stock usually provides a safer return than a stock mutual fund."
The possible answers? True, false, do not know and refuse to answer. Sixteen percent of people got it wrong. "Do not know" was chosen by 38 percent. In the U.S., 46 percent of workers got it right. Good for you, America -- though Germany beat you handily. (The answer, in case you were wondering, is false.) It was an inflation question that had the highest percentage of wrong answers, however. More than 20 percent of workers didn't grasp how higher inflation hurts their buying power. Given that declining health was the most-cited retirement worry, at 49 percent, and health care is an area (in the U.S., especially) with high cost inflation, well, that makes the subject something older folks should have down cold.
The missing question: (Score:2, Interesting)
Q. Do you think the following statement is true or false?
“Buying a single company stock usually provides a safer return than a stock mutual fund.”
Re: (Score:2)
Re:The missing question: (Score:5, Insightful)
"The real missing question?"
The real missing question is right there, in the headline: "The World Isn't Prepared for Retirement". What the fucking!!!???
"The world" is very well prepared for retirement, thank you very much. This, like mass assassinations, is very much a USA-only problem and the solution is, again just like in the mass assassinations case, very much fucking obvious for everybody but USA: you fucking collect taxes, and you pay fucking retirement pensions out of these taxes. Problem solved; no need to understand stock versus mutual funds, compound interests or stock versus public debt evolution.
Re:The missing question: (Score:5, Insightful)
"The real missing question?"
The real missing question is right there, in the headline: "The World Isn't Prepared for Retirement". What the fucking!!!???
"The world" is very well prepared for retirement, thank you very much. This, like mass assassinations, is very much a USA-only problem and the solution is, again just like in the mass assassinations case, very much fucking obvious for everybody but USA: you fucking collect taxes, and you pay fucking retirement pensions out of these taxes. Problem solved; no need to understand stock versus mutual funds, compound interests or stock versus public debt evolution.
One small problem in this is that many countries who claim to have this "solved" weren't counting on an aging population. That will make it incredibly difficult to simply collect "fucking" taxes to pay "fucking" retirement pensions.
As far as I know, only the following countries have universal pensions: Bolivia, Botswana, Brunei, Guyana, Kosovo, Namibia, Netherlands, New Zealand, Samoa, Suriname, Seychelles.
The others that do have some sort of public pension have some sort of means-test for their pensions and pensioners often rely on private pensions in these countries. This is the case of many of the countries in Europe.
Unfortunately, because of population dynamics and budgetary indiscretions, some countries which have massive shortfalls in their public pensions have taken drastic steps such as seizing private pension funds to make up for public pension shortfalls (like Argentina, Poland, Portugal, Russia, and Hungary). Expect to see more of this as the aging population dynamics put more pressure on public pension funds. This will of course delay the day of reckoning for government pension plans and they will eventually need to choose between lower benefits (angering the current pensioners) or higher taxes on an increasingly smaller working population (compromising the future).
Of course voters can (and will) remain blissfully ignorant of stock vs mutual funds, compound interest or stock versus public debt evolution and vote accordingly (as they generally do)...
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The Netherlands do indeed have a universal pension, but it's not an awful lot of money, around 1200$ a month for a single person. Probably enough to live on if you have cheap housing, but not really what I aim my retirement to look like. Moreover, the retirement age is creeping up and there are worries about sustainability as it's a pay-as-you-go system.
Employees often have mandatory collective retirement funds, which are actually really well funded. They are mandated to have 'coverage' of over 100%, meanin
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Or we could stop spending so much fucking money on our massive, embarrassing military. We could shave 200 billion off of that and we'd still be spending more than twice that of the next largest military budget.
All this shit sounds like someone else's problem until you realize that the aging population you're talking about is going to become your responsibility sooner or later. Maybe not responsible for anyone now, maybe never will be directly responsible for anybody in the future, but you will *personally*
Re: The missing question: (Score:2)
Qualitatively different, not just quantitatively (Score:5, Insightful)
Thanks for posting the question.
The difference in risk is so much that it's a fundamentally different activity, for the most common types of "single stock" people buy, and the most common type of mutual fund.
Typically when people buy a single stock they choose a new company with a lot of hype. The "value" of the stock is based on the hype. The most common mutual funds are index funds and the like, where you're invested in not only 100 different companies, but 100 different *mature*, profitable companies. It's very, very likely that in a big group of companies which have been making money for 100 years, most of them will keep doing what they've been doing - making money.
Investing in an index fund is just that - investing, putting money aside now so you'll have it later, and have more. Trying to guess which new company will do best, indeed trying out OUTguess everyone else, is fundamentally *gambling*, not investing.
Even if you guess right that Fitbit or Tesla will do well in the future, that expectation os already built into the current stock price. For that investment to be good long term, the company has to do BETTER than everyone expected them to. That's straight up gambling when you buy a single stock and it's a young company.
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Typically when people buy a single stock they choose a new company with a lot of hype.
Not true. When people have their entire retirement savings in one stock, it is usually in the company they work for, acquired through an ESOP.
That's another common, and dangerous, case (Score:4, Insightful)
That is another important and common case, having stock solely in the company one works for. That's uniquely high risk because if something goes bad with the company you can lose your job and your savings, at the same time.
I will probably soon have an opportunity to get into my employer's stock pre-IPO, and it will probably jump right after the IPO, so it would be a good idea for me to get in. BUT I don't want both my job and my savings to subject to whatever happens with this company, so I'll be looking to get out pretty quick. I'll have to look at the plan details to see how I can do that, and when. I may well keep the stock and switch jobs.
The difference is based on math (Score:5, Informative)
It's a consequence of statistics, nothing to do with stocks. If you roll a 1d6, every number between 1 and 6 has an equal chance of appearing. If you roll a 2d6, the bell "curve" becomes a triangle, with 2 and 12 being the least likely outcome (1 in 36 chance), and 7 being the most likely. A 3d6 turns flat sides of the triangle into a true bell curve. Increasing the number of dice results in the curve narrowing even further [aber.ac.uk]. By the time you get to 10d6, it's virtually impossible to get either of the extreme outcomes (1 in 60 million chance of getting a 10 or a 60).
So when you put thousands of stocks in a mutual fund like an index fund, it's virtually guaranteed to perform at the market average. Whereas if you buy stock from a single company it could perform average, or you could make a lot more money, or you could lose everything. Insurance companies and casinos rely on the same thing - by grouping lots of insured or gamblers together, the overall outcome becomes much more predictable. The increased accuracy of prediction (outcome closer to the average) allows them to make money despite decreasing their margin (offering a lower price for insurance than the competition).
Re: (Score:3)
Trick question. The risk depends on the specific single stock and the specific Mutual Fund in question.
Some mutual funds are at a different level of risk than other funds, and some stocks at are a different level of risk than other stocks ---- the highest risk funds can very well have less safety than some of the lower risk stocks.
Shadybrokers (Score:2)
Considering you can buy bitcoin and gold and real estate mutual funds, the embedded risk is much higher than buying almost any fortune 500 company stock.
When you toss in the broker fees and backend fees many mutual funds charge, espcially the shady actively managed ones.
Well there's room to say the question is ambiguous.
However, I suspect that most people being polled are not doing this sort of reflective analysis on the question itself. They just are not sure how one picks a safe mutual fund.
One the other
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When you toss in the broker fees and backend fees many mutual funds charge, espcially the shady actively managed ones.
A wiser strategy is to use a brokerage like Vanguard or Fidelity that doesn't have those things (or doesn't require you to use them). For a simple approach, pick their index fund that matches the S&P 500, park your long-term investments (won't need for 5+ years) in it and leave it alone until you actually need the money. Any dips in the market, even severe ones, will be corrected out by the time you need to pull your funds.
know about index fund mutual funds cap gain? (Score:2)
If you could figure that out then you would be in the 60% of people who also got the question right. If you can't then the idea of no-load is a meta concept.
Additionally, have you ever thought about what happens if every one in the world is invested in an index fund? Strange markets. And then when everyone heads for the exit doors, what happens?
Finally on a more esoteric level, did you know that when cap gains occur because some one else sells their shares, you pay a share of the cap gains they triggered
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Think about what happens when monthly pay-ins occur from companies. Think about what happens when companies dump in profit sharing or matching funds at the end of the year. Some companies don't do it that way but more than a few do including mine who OBTW will withold all matching if you leave before Jan 1st - cute huh? 401K haven't been around all that long, what happens when all of those folks who signed up when it began reach retirement age and begin withdrawing? As you pointed out, things are going to g
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How about a random stock from the S&P 500?
***USUALLY***
Almost half the country doesn't have a dime (Score:5, Insightful)
And nobody's going to convince me that half Americans are just irresponsible spend thrifts or lazy bums; especially since Europe is having none of these problems. Even if they are, what the hell is wrong with our civilization if that's the case? I thought America was the greatest country on earth. God's country and all that rot. Bullshit. Something's wrong. Something outside our control. And let's face it, we know damn well what it is [google.com]
Re:Almost half the country doesn't have a dime (Score:5, Insightful)
constant assault on Unions means they have no opportunity and with most living paycheck to paycheck they have no opportunity to save.
Very many, probably the vast majority of the people supposedly living paycheck to paycheck ARE overpurchasing discretionary items, such as Junk Food, Cable TV, Smartphone Plans/Cellular data, Netflix, extra Gas/Vehicle miles for non-essential travel such as to go out and socialize, other Toys/Games/Entertainment.
So, even for 99% that claim to live Paycheck-to-Paycheck it IS a choice; they could cancel their cable TV and save $50 a month and make sure NOT to substitute those savings by purchasing anything else, which is $600 a Year saved that will easily grow to a million$ if they keep consistently putting that $50/Month in for 50 years .
Cancel that non-essential cell smartphone plan and go back to a cheap featurephone, and save another $50. Get the discretionary reduced by $250/Month that go into savings, and the time until $1 Million is saved up goes down to about 37 years.
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So, even for 99% that claim to live Paycheck-to-Paycheck it IS a choice; they could cancel their cable TV and save $50 a month and make sure NOT to substitute those savings by purchasing anything else, which is $600 a Year saved that will easily grow to a million$ if they keep consistently putting that $50/Month in for 50 years
$600 per year x 50 years = $30,000. Where do you get interest rates that makes those savings become $1,000,000?
Re:Almost half the country doesn't have a dime (Score:5, Informative)
>$600 per year x 50 years = $30,000. Where do you get interest rates that makes those savings become $1,000,000?
$50/month for 50 years = $30,000
$50/month for 50 years earning 9.99% returns* = $869,950.48 (not a million, but close enough).
In retirement, this can very easily provide and inflation protected $44,000/yr in additional income.
* S&P 500 30 year period returns (http://www.moneychimp.com/calculator/compound_interest_calculator.htm)
1926-1956: +10.77%
1956-1986: +9.63%
1986-2016: +9.99%
** 7% growth - 2% inflation = 5% or $44,000/yr
Asuming you can pull off a 10% rate of return (Score:3, Informative)
Second, you do know what inflation is, right? At the current rate you're $1 million saved will have about $140k in buying power in 50 years based on the Cureau of Labor Statistics' calculator. Only inflation is _much_ worse than it was 50 years ago, so better plan on that being $100k.
Also, better plan on a few major market crashes wiping out yo
Re:Asuming you can pull off a 10% rate of return (Score:5, Insightful)
Also, better plan on a few major market crashes wiping out your savings.
No... Markets are cyclical, and crashes are part of it in fact: multiple market crashes are EXPECTED
to happen over a period of 50 years, and they don't wipe out any savings --- they are a temporary decrease in market value - stock returns will be negative for that year, but on average adding up positive and negative years the result comes out 10% ahead annualized given a sufficiently long time horizon.
Crashes, the business cycles, and major events are the REASON people don't put 100% of portfolio value in an asset class. For example, you perhaps choose 75% of the savings in company stocks and 25% in Fixed-Income/Bonds, Real-Estate funds, Inflation-Protected Securities, other debt securities, convertibles, or Hedging options, and similar instruments.
During the years immediately after the "Crash"; the NAV of the Stock position shrinks, and the portfolio's Cash position then becomes overweight --- e.g. You will have less than 75% of the target allocation in stock and more than 25% in cash. Every 1, 3, 6 months, or 12 months, the manager rebalances the portfolio if it deviates from the target allocation by a sufficient threshold% and dollar amount (but usually just perhaps once a year or two to minimize fees), therefore, after a market crash the portfolio will be getting rid of Cash or selling the Hedging assets and BUYING stock to bring the portfolio back to the target percentages, which means you will get maximum advantage of the market crash by purchasing more stock while the price is still low ---- On the other hand, after a year when your funds perform extremely well, then the stock allocation will .exceed 75% of your portfolio value, therefore, when rebalance occurs you will be selling Stock mutual fund shares and buying into your other funds that Hedge the stocks risk
That Markets are cyclical bullshit (Score:2)
The big thing is keeping risky Wall Street stuff away from safe Main Street Stuff. Also regulating commodities and keeping crap like High Frequency trading and other paras
Re: (Score:2)
I have no idea why your post is informative. His math makes a lot more sense than yours. If you can't pull off a 10-15% return after taking inflation into consideration find a financial advisor. In the last 20 years I think I had 2 or 3 years that gave me a return less than 10% after inflation. He may have exaggerated the return but it would be closer to $1million than your $100k.
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$600 per year x 50 years = $30,000. Where do you get interest rates that makes those savings become $1,000,000?
Your idea of multiplying each years' payments by 50 is invalid assuming the savings are being invested responsibly, please see Here [investopedia.com] for the formula regarding the future value
The answer is people buy in a combination of mutual funds that are selected to have an expected average annualized return
of 10% or higher after fees for periods of 10 years or more with optimal risk, and that's not ve
What I'm hearing is if they're not eating gruel (Score:2)
It's a verifiable fact that Millennials are worse off than their parents and grandparents. It's kind of a big deal, since that's the first time in centuries that's happened.
Re:What I'm hearing is if they're not eating gruel (Score:4, Insightful)
It's a verifiable fact that Millennials are worse off than their parents and grandparents.
Not so fast... Millenials are worse off as a group by their own individual choices, because they buy more goods and services that are not really needed and make worse deals than their parents or grandparents --- for example, many of them are swindled into taking on student loan debts by allowing themself to incur expenses that are unjustifiably large VS benefit.
and sitting quietly waiting to go to work (or better yet, working 16 hours a day) then the nasty little heathens deserve what they get.
What kind of crap are you spewing? Nobody "deserves" to get anything from anybody other than the agreed upon goods, services, or compensation in exchange for $$$, work, or services provided.
All i'm saying is the people who claim to be living paycheck-to-paycheck and unable to afford to save at all for retirement or future needs are Full of Shit: if they are spending any money on non-essentials, then they are Not "unable", but they CHOOSE not to --- The fact they DO have the choice to spend the $$$ on Non-Essentials PROVES that the Money would be available to save for their future, BUT they choose to prioritize the Immediate non-essential Luxury as MORE IMPORTANT or PRIORITIZED over saving for Retirement and prioritized over saving to help build an emergency fund or improve their overall Financial well-being.
The $50 to $80 / Month Cable TV or Netflix bill PLUS exorbitant Smartphones with unnecessary features are GREAT examples, because the purchase is 100% on Audivisual entertainment. The equipment alone (such as Televisions) are luxury items, and so is cable service.
Millenials' grandparents' likely never owned TVs or Smartphones, let-alone pay an equivalent of $60/Month for such items.
There are plenty of free ways to be entertained, such as taking walks down the street, or riding a bike to the nearest library, those are also activities that promote thought, higher productivity, and potential aid to professional development.
That's just two high-ticket examples.... Another example is: What kind of Vehicle people choose to buy. Don't claim to have no choice and be living paycheck-to-paycheck and having purchased a brand New $30K+ vehicle; that has a high loan-servicing cost, a high rate of interest that will be paid over the life of the vehicle, AND a higher insurance rate, when a used $12K vehicle of an appropriate type well-researched purchase (Including the expected lifecycle costs to insure and maintain) would have (A) Met the needs, and (B) Resulted in lower monthly costs: Again, this is a case where "Live paycheck-to-paycheck" was NOT dictated by the marketplace, or by the wage, But it was the result of management decisions made by the individual.
Re: What I'm hearing is if they're not eating grue (Score:2)
Re: (Score:2)
https://www.theatlantic.com/ma... [theatlantic.com]
Agreed, something doesn't smell right...
Re:The missing question: (Score:5, Insightful)
Re: (Score:2)
Long-term return is 9%-10% annually (Score:5, Informative)
The long-term average return with a low-fee index fund is around 9%-10% per year. About the same as the AVERAGE return from individual stocks - which makes sense because index funds are composed of many individual stocks.
The risk and volatility is much lower - you can almost guarantee you won't make much more than 10% or much less than 9%, over the long term.
A lot of the volatility of index funds is actually volatility of inflation - they tend to have higher nominal returns when inflation is higher, so the real returns are more stable than the nominal returns.
Re: (Score:2)
The risk and volatility is much lower - you can almost guarantee you won't make much more than 10% or much less than 9%, over the long term
I want to point out that in the long term, the stock market will not grow much faster than the economy as a whole. It has recently because new people have been investing more and more in the market, pushing more money into the system, pushing up prices, but long term that won't last. (This doesn't mean the process will reverse, although it could).
I don't know when exactly this will change, but it's good to remember as a general rule, in the long term the stock market can't exceed the gains of the general
Interesting thought. Growth vs dividends/returns (Score:3)
That's an interesting observation and it has me thinking.
It didn't seem right at first, yet it did. I had to ponder it a bit. I thought about money flowing in and out of the country. I thought about the the companies in the index can outperform the economy as a whole. Still, those factors didn't seem to fully explain how for 100 years returns have SIGNIFICANTLY outpaced economic growth.
Then it occurred to me we must carefully distinguish between RETURNS and growth. There's no reason a five-pound chicken ca
Re: (Score:3)
That's an interesting observation and it has me thinking.
Now you're thinking, I like it :)
If you can get a stock that gives you 10% dividends (and isn't doing some kind of weird trick) then of course, take it. The total amount of money in the world is going to equal the total amount of goods, though. If the amount of money increases without the amount of goods increasing, then you will see inflation, and each 'piece' of money will decrease in value.
Another important distinction to consider: some things are capital goods, others are consumption goods. Buying
Re:The missing question: (Score:5, Interesting)
Mutual funds are pretty much a scam these days with so many fees,
This is nonsense. Fees are lower than ever.
Most of my retirement savings are in Vanguard [vanguard.com] index funds. No upfront or backend fees, 0.04% annual maintenance fee.
Here's some free advice:
1. Invest in index funds, and never in actively managed funds.
2. Never take financial advice from someone trying to sell you something.
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Most of my retirement savings are in Vanguard [vanguard.com] index funds. No upfront or backend fees, 0.04% annual maintenance fee.
Here's some free advice:
1. Invest in index funds, and never in actively managed funds.
2. Never take financial advice from someone trying to sell you something.
My friend is a retired investment advisor and he recommends both Vanguard and Fidelity - for the reasons you mentioned - and he has some of his investments with both companies. I went with Fidelity for a (new) individual brokerage account as (a) I like their online tools better and (b) my company has their 401k program with them so it was a simple button press for me to create another account with them (as they already had my personal information).
Re: (Score:2)
Russell Large Cap Growth, Russell Small Cap, US Structured Research, S&P 500. Spread a little into the Euro/Asian funds and maybe choose one of the later retirement year funds so it's not sticking crap into bonds right now. Vanguard has good funds but man they make it hard to figure out what the tickers are for your companies funds when they use them for management!
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One of the best seemingly minor decisions I made financially was putting a few thousand dollars into companies whose services will be needed no matter what happens to the economy, and whose growth is driven simultaneously by multiple levels of the economy — specifically, Mastercard and VISA.
I bought some MA at their IPO price of $4.435 (split adjusted, I guess) in May 2006, and it is sitting at $200, which is an annualized ROI of over 37%, with 65% growth in the past year. Over the 12 years that I'v
Re:Even if retirement is 5 or 10 years away? (Score:4, Informative)
Even if retirement is 5 or 10 years away?
If you retire at 65, you can expect to live another 20 years. So if you are 5 or 10 years out, you have a 25 to 30 year time horizon, which is enough to smooth out volatility. If you have significant savings, you should stay mostly in stocks.
Seems to me you ought to shift into less volatile options.
There are index funds designed to be less volatile. They track utilities and health care, which tend to have fairly steady profits even in recessions.
Close to retirement: Yes and (Score:3)
Close to retirement, yes you should still have your stock investments in low-expense index funds. You should ALSO have bonds and maybe some other types of investments. As you get nearer to retirement, you should typically buy more and more bonds, but your stock choices shouldn't change much.
I say typically - there are times when the rates on safe bonds are so low that it's hard to justify buying them, even close to retirement. I suppose it also depends on what "close to retirement" means - when you'd LIKE t
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I gotta' tell you, the bond funds I'm able to choose from in my 401K have done nothing but lose money for at least the last year. I leave a smidge in there just to see how quickly it goes down. When bonds begin to show some strength I'll consider buying into them but so far that's not been the case despite interest rates rising. Hopefully the orange idiot doesn't nuke the stock market, he sure seems to be trying!
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Making more money by putting it somewhere and not doing anything at all with it only works under very specific circumstances
Like converting it to physical gold and silver, and putting it in a personal vault.
The REAL Question... (Score:2, Offtopic)
...if you could invest into the market, which has returned an average of about 10% over the last 30 years, all the money that has been confiscated from you in the form of social security taxes, how much money would you have now?
Re: (Score:3)
The Bob's Retirement Survey 2018: Do you think the following are true?
If you answered yes to all of those, you've passed the retirement test.
Re: The REAL Question... (Score:5, Insightful)
Sadly, appartently very few are disciplined enough to actually invest money like that and would instead have spent that on things like a better car, bigger house, or a vacation vs investing it. Those fools need SS to be taken or they would truly be penniless. The numbers I see for 401K and savings balances are terrifying...
For most people, retirement isnt possible. (Score:5, Insightful)
The continual slide of wages vs inflation, the endless fun-ride of being 'obsoleted', being excluded through ageism, the effective death of the pension, and a bevy of other factors all align to basically ensure that nobody aside from people on the far upper end of middle class and the wealthy are able to retire.
Everybody else is just ignored by the system, and when the time comes, those that "have theirs" will fail to comprehend why they (everyone else) failed to save for retirement, will blame the victims who really would have loved to save for retirement, will refuse to take up the slack in society, because "they have theirs", and through it all, the people that have been systematically shafted because they were not born rich enough to get a suitable head start on this fun-ride will become an epicenter for systemic illnesses, and societal drains that the others will refuse to pay for.
But dont let that bother your little heads too much. Because the downward pressure of this disadvantaged class will further pull the upper middle class down, due to mandated tax increases and a yawning social welfare crisis caused by the earning gap, which will further push the next generation of upper middle class into serfdom.
Want to prevent this horrible nightmare future? It's really easy in principle, but impossible to implement in reality: Put a stop to the ever increasing wage gap, drive up baseline wages, and drive down top earnings, so that the middle class grows again instead of shrinks.
No. You are not such an amazing talent that you "deserve" to earn 100 times or more than the average person.
No. You arent.
No. NO YOU AREN'T.
Re: (Score:2)
It's already happening. Boomers say the younger generations are irresponsible and lazy and that's why they don't have a golden final salary pension scheme and half million pound house.
Re:For most people, retirement isnt possible. (Score:5, Interesting)
It's already happening. Boomers say the younger generations are irresponsible and lazy and that's why they don't have a golden final salary pension scheme and half million pound house.
I am an older baby boomer, and I don't know any baby boomer that honestly believes "the younger generations are irresponsible and lazy ".
I'm sure there's some out there, but I'm sure there's morons in every generation. I just don't know any.
The people who are saying these things are almost all younger than we boomers, and/or are liars hoping to steal from whoever.
What the boomers I know believe is that a fundamentally dishonest media makes up all kinds of shit about people to drive sales.
They're making up shit about the millennials, and they're making up shit about baby boomers.
Pick any demographic that you're a part of, and consider the BS that you're being blamed for that you know isn't true. It's the same with the demographic that you're not part of.
Do you find it confusing when you see a millennial on the news repeating the "millennials are lazy, irresponsible, make bad choices" story?
I don't. I'm not at all confused when I see a liar; I just see a liar.
Re: (Score:2)
Re: (Score:2, Informative)
Does a person in the UK "deserve" to earn 100 times more than the same person doing the same job in India? Unless you want the UK to look like India that isn't going to happen.
Middle class people in India can afford full-time maids and live-in child care for their four kids. Middle class people in the UK make four times as much, but live in shoebox apartments and can't afford to have children at all, so the government has to encourage immigration to keep the population from dropping.
Economic classes are not directly comparable country to country. Paper numbers do not make reality.
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Does a person in the UK "deserve" to earn 100 times more than the same person doing the same job in India? Unless you want the UK to look like India that isn't going to happen.
Middle class people in India can afford full-time maids and live-in child care for their four kids. Middle class people in the UK make four times as much, but live in shoebox apartments and can't afford to have children at all, so the government has to encourage immigration to keep the population from dropping.
Economic classes are not directly comparable country to country. Paper numbers do not make reality.
Depends on what you call the "middle". Median? Mean? I doubt that neither the median nor the mean income in India can support full-time maids and live-in child care.
Certainly a person with a job in India that has a job internationally-competitive comparable to a "middle" class job in the US or Europe will be able to afford those kinds of things. However, people that have that kind of job in India are definitely not middle class in India, they are definitely in the upper 1% of income earners... The upper
Re:For most people, retirement isnt possible. (Score:5, Insightful)
I agree with your point of view to some extent but your solution is so vague that most people won't understand how to implement it.
I would say that people need to understand that money represents debt and that when buying a product the price listed is not what it costs you. If you are in a 50% tax bracket it means that the product is twice as expensive because you need to firs pay the taxman before you can purchase the product. In the same sense if you start saving your money, it will work for you when investing it. The less you will need to earn it. The earlier you start, the greater the benefit.
The problem is most people want instant gratification and place absolutely no thought on retirement or a rainy day until they get old enough, or in a position where they can no longer do anything about it.. If you are not born rich you will need to place more effort into saving and stop worrying about the latest and greatest. Our society is based on extracting money from people. You need to understand where your money is coming from and where it's going. It takes effort to take control.
It takes effort to understand that saving, investing, is the most important factor in your life after the necessities (food, shelter). Entertainment comes last. If after all the effort there is no money to save then you need to make changes ASAP. Either to improve your income or reduce your expenses or both.
Nobody cares about you as much as much as you do. If you can't respect yourself enough to make the changes necessary to improve your life, nobody will do it for you. If you are not saving (investing in yourself) then you are doing it wrong.
Once you are on the road to saving the next phase is to do a cost analysis on everything you buy. Cheaper isn't always better. Renting sometimes is an option when the use of the product is for temporary use. You don't need to get bogged down on this decision but you need to take some time analyze why you need it.
Lastly and most importantly it take decades to build, Quick short term gains are rarely beneficial. You need to surround yourself with like mined people that can help and encourage you through the tough times. Politicians always put themselves first. I have yet to see a politician who is in it to improve peoples lives. The proof is in the openness of the process. When decisions are being made in closed door meetings where the discussion are not public, you can be assured they are not thinking of you.
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You are not placing the money under your mattress, that is not saving. You are "spending" your money on assets/items that can be resold later for more. You are spending to add value to your assets which depreciates at a slower rate than inflation. The point is to increase wealth not stop spending. It would probably lead to better products and less waste. Better productivity on an individual level.
Don't forget those snowflakes earning 100x (Score:2)
Re: For most people, retirement isnt possible. (Score:5, Insightful)
Earning 1000x the average wage rather than 100x doesn't make you 10x more innovative or driven, it's doubtful it'd even makes one 2x more so. Humans simply don't work like that, and indeed the tendency of the super rich to simply beget more super rich and invest their earnings rather than found awesome startups that produce world-changing widgetry belies this.
If you have fuck tons of money, you did not earn all of that money purely out of blood, sweat and tears. You or your ancestors relied upon the machinery put in place by society, and ought not shirk your moral obligation to help maintain the system that 1) allowed you to accumulate such wealth 2) allows you to maintain such wealth 3) allows such wealth to have any real meaning because society is able to function sufficiently well that we're not all subsistence farmers.
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Simply because one CAN do something, does not mean that they SHOULD.
There are very real consequences for the whole society, that WILL eventually come home to roost, from trying to take everything you can, because you can.
Labeling people that see the bigger picture, and say "Whoa, Hold up there buddy!" as "Suckers", is how you end up with a world where 1% of people own 99% of resources, and where most people live either impoverished, or close to impoverished.
No, you are not justified in demanding wages that
Retirement is a new phenomenon (Score:5, Interesting)
Throughout history, people worked until they were physically unable to work.
The idea of retirement came about through FDR's "New Deal." Even then, the "retirement age" of 65 was considered very old, considering that life expectancy at the time was 61! Since then, life expectancy has risen by at least 10 years, but the "retirement age" has not risen with it.
Financial literacy is needed, yes. But is "retirement" at 65 a realistic goal for most people?
Family Feud talk radio (Score:2)
It was certainly a realistic goal for the political class to promote during an extremely unusual period in economic history: the glorious middle class years between 1950 and 1980.
Plus with the boomer bulge, this core demographic was due to control society at the polling stations until right about now. When these industrious, retirement-fund beavers had happy thoughts (whether naive or not) politicians could plan on a second term.
Reagan was the begin
Re: Family Feud talk radio (Score:2)
North Korea has been making crazy threats for decades, his Trumpiness is enough of a troll himself to throw that right back at him vs trying to placate him like previous administrations. I would argue that is the policy we should have had for decades now, much like all of the foreign aid we send to
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But is "retirement" at 65 a realistic goal for most people?
It could be. It is not because the prevailing attitude among the majority is to drag everyone else down rather than to build everyone else up.
I'm one of the lucky ones. I'm 53 and recently retired after a 30 year career as a network specialist for a large public sector employer. I have a good pension, and not only that, I have a well managed pension. It is fully funded and consistently makes large returns on investments so there is no risk to the taxpayers, and being part of government there is no risk
Travel the world some (Score:2)
Social Security is the exact same thing, except it expands it from direct descendants taking
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Re:Except for a very, very small number of people (Score:5, Insightful)
You speak like a young person. Not much use after 55? Really?
Perhaps we should just practice euthanasia, to "clear" the old, infirm people out of the workforce.
I'm 51. I can still code circles around my younger peers, and my experience helps me avoid traps they regularly fall into. I don't think those abilities will suddenly disappear in four years.
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You're both right.
I'm 51 and I do feel less capable in some ways than when I was 31. Lack of enthusiasm, more external interests and distractions, greater health infirmities. Which doesn't mean I'm incapable, on balance my experience and acquired wisdom balances out my constitutional inability to work 24 hours in a row -- I can't do it, but I don't need to.
Depending on your frame of reference, I'm either less capable because I don't do marathon all-nighters or I'm more capable because I don't need to.
I th
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I think thatâ(TM)s a dangerous arrogance. Whatever wrongs are ascribed to the boomer generation, most older boomers still have wisdom about many things. Itâ(TM)s a natural process every generation has possessed, regardless of their generationâ(TM)s historical wrongs. Humans that have lived 50-60+ years have seen and experienced a lot.
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One thing I have stopped doing is giving a crap about politics or trying to advance in the organization having flirted with being a manager for a while and deciding it wasn't something I enjoyed doing.
Re: Except for a very, very small number of people (Score:2)
Carousel is a lie. Life clocks are a lie. There IS NO RENEWAL.
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I'm guessing that this "death march" concept mostly applies in Silicon Valley. Never in my 30-year career have I felt pressured to work long overtime hours for extended periods of time. I've never even heard of anyone having to do this. And here in Houston, I run into older programmers regularly.
In one sense, you're right. Older, more experienced programmers do tend to have larger salaries, which makes them less desirable to some companies. But companies that have to actually run based on their income (as o
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That is idiotic.
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Age discrimination is what it is, and it is rampant in the tech industry. The wise ones doing it, keep things under wraps because it is easy to do as long as nothing is done/said in the open.
But the wise understand, Today most everyone who is an employee in the tech industry will sooner than later be the one moving on, voluntarily or not.
Years ago, I chose to leave a large co
News at eleven (Score:3)
Company that makes money investing peoples retirements says more people need to use their services in order to retire.
First, let me say of course retirement is important. But lets be clear, saving for retirement is big business for the financial world. According to them you can never save enough because every penny you aren't saving is money not on their table.
Every day I go to work I see people who seem to talk about nothing but their retirement savings. And they mock the new generation coming in to replace them because at least according to them they aren't doing anything and in stead are actually living life.
Somewhere is a happy medium. I'd rather take off to NZ in August for a weeks snowboarding now than take a cruise when I'm 70. Of course there are long term costs associated with that. But that's life, sometimes you have to actually life it.
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You don't have to go to New Zealand to snowboard. The happy medium is to go somewhere more affordable to snowboard if that is your thing.
He could be living in Australia, so NZ might be the more affordable choice than, say, anywhere else in the world. :-)
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You don't need anyone's help to invest in your future. Investing early in yourself allows money to work for you. The NZ August trip invested early on(in your 20's) could pay a monthly trip to NZ when you are 60. You may not be in shape to snowboard but then again you will most likely not have the energy to work physically for 8 hours either.
No surprise, financial planning is fraud (Score:5, Interesting)
It's hardly a surprise. In the US we're filled with "financial planners" and other similar people who pitch themselves as helping improve your financial life, when in fact they aren't even really obligated to make their clients fiduciary interests primary. They're nothing more than glorified stock salesmen, pushing high-load, low-yield branded mutual funds, crappy stocks and high-activity trading which they benefit from.
The sales pitch, even when its half-informative, is often a deceptive lure. Guy with shitty retirement planning breaks down and goes to a financial planner. Is told he's way behind the curve. Guy says "what about a no load mutual fund", and the planner is like "you could do that, but these days they only return 3% and based on my magic spreadsheet you need a more aggressive return, like my portfolio of targeted mutual funds and some individual company stocks where you can get that 10% yield you need to catch up".
So the guy buys into shitty funds and stocks that mostly likely just help the financial planner retire.
Financial planning education is non-existent in schools, fixing that would help. It would also help to crack down fucking hard on "financial planning" and require SIMPLE, BOLD PRINT, PLAIN ENGLISH, UP FRONT disclosures that planners are in the business of selling products, not in caring about your outcome. Or better yet, REQUIRE that financial planners (or whatever label you want to invent) MUST PLACE THEIR CLIENTS FIDUCIARY INTERESTS AHEAD OF THEIR OWN. If we had financial services that were about client interests and not just pushing shitty investments it would help everyone.
Brokers and salesman can continue their line of chicanery and fraud, but at least there would be a legitimate category of financial planners people could trust.
Stock is such an American concept. (Score:2, Interesting)
TFS is ridiculoisly American. ... "special".
You can have your own views, of course.
But don't be surprised, if the world considers your mindsets a bit
In most countries of this planet, people do not even consider stock trading legitimate concepts. (Due to profit essentially being immoral and anti-social, harming society, and being very close if not equal to stealing.)
Hell, you expect Chinese and other unamerican people to know the intricacies of capitalsim?
Come-on! I know "you Americans" are not "all like thi
Re:Stock is such an American concept. (Score:4, Interesting)
I came to say something similar.
The summary (haven't read the article of course, this is slashdot afterall) assumes that the world considers money based investments as a way of funding retirement. Not all the world agree with that model.
In France (for instance), retirement is mostly paid by taxation on the next generation. In many places, the community will take care of you. If my future well being is not based on market investment, why would I even need to understand it. This would be a purely academic skills.
Now, I am not arguing one model over the other one. I am just arguing that the article should really be entitled "the world does not understand how the American retirement system works". Which is not really surprising.
Not bad (Score:2)
From the result, 80% of people understand how inflation affects the value of their money, and 45% percent understand something about stocks, even though investing in stocks is required to manage retirement money (and only 16% got it wrong). All in all, not bad.
A pension fund... (Score:2)
...puts out an online quiz about economics (which very few people understand), gets the results back, and declares that most people don't know how to manage a pension fund.
Yes, we should definitely all have pensions, especially from you... until the next financial crisis (created by you f**kers) decimates our pensions and makes them next to worthless, and/or you force our governments to impose austerity on us so that our healthcare and social security systems start to fail and people start dying.
So no, the
The US isn't. (Score:3)
It's the US that isn't prepared, not "the world". Civilised countries with a mentality not stuck in the early 20th century have retirement programs, medical insurance and a social welfare at least trying to offer a dignified retirement to everybody.
Or at least we try, and in details in which we don't succeed, we recognise that as a problem that's to be fixed.
Pool of Questionees (Score:3)
Keep in mind that the control group of people questioned fall into the following category:
-Surf the internet looking for quizzes to take.
-Have nothing more important to do than take online quizzes.
Extrapolating that the world isn't ready for retirement based on a three question survey delivered via online quiz is bad science.
Here's a better headline:
The more likely you are to know what kind of fruit represents your personality, the less likely you are to be prepared for retirement.
That says it all.
Retired (Score:2)
Answer missing (Score:3)
it's missing 'I don't give a shit' since I get a pension in Europe where I don't have to care about stocks, the employer and employee both paying the same amount (usually around 8% each) into the employee's state guaranteed pension fund from day 1.
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You're deluding yourself. I'm also a European and at least in theory will get a state pension. Its so little that it won't even start to pay the bills, and the retirement age keeps being pushed back. Word is that there are so many dependents on the welfare system and its growing, that they wont even be able to pay the tiny pension they are currently promising by the time I get to retire in 12 years or so.
I'm glad I made my own alternative plans years ago, so I don't actually need to rely on the state pensio
Alternate Answer (Score:2)
Q. Do you think the following statement is true or false?
“Buying a single company stock usually provides a safer return than a stock mutual fund.”
A: I work in IT, not the investment business. Considering this is one of those things you REALLY don't want to screw up, I have a financial advisor who is a fiduciary who answers these questions for me. I meet with this person bi-annually to discuss where we are and where we need to be in order for me to retire at 55. Based on the fact that I dump a
Stunning news! (Score:2)
Wages have not kept up with inflation, productivity gains are all going to the top 1%, there is no savings, there is no possibility of savings, there is no possibility of retirement. People are hoping and praying they will stay healthy and employed till the day they die.
And some idiot is blathering about 2% interest for five years, 1% interest on 2% infla
BRING IT ON (Score:2)
All I ask is the opportunity to prove to the world once and for all that I am financially irresponsible. While proving that money cannot make me happy.
the most valuable forum on the internet... (Score:2)
... is bogleheads.org. Yes, it's a cheesy, almost appeal-to-authority name, but bogleheads.org has a ton of info, and a lot of very smart posters, if you want to learn about investing and retirement planning. It's priceless. Check out "getting started" in the wiki, before reading the forums. Read some books by William Bernstein, Larry Swedroe, one of the bogleheads books, and "A Random Walk Down Wallstreet".
The gist of it all is:
1) save as much as you can
2) use low-cost index funds
3) choose a reasonably app
Can only tax country's production, at a certain ra (Score:2)
Some countries now have more debt than they have economic production. They could institute a 100% tax and still go bankrupt, even if that tax didn't effect the domestic economy. So the choice involved is taking on the debt in the first place. Once you have unsustainable debt, the country is going to go bankrupt and there's nothing they can do to prevent that.
Of course the tax rate DOES effect the economy, making the situation even more dire. Would YOU spend your life savings to open a business in a country
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> a business in a country with a 100% tax rate
Or worse, the country decides to do a "haircut" like Cyprus did. In other words, they just stole money out of accounts in banks. At first the number of taking 1% was floated then I think the final number was 47.5%. Why would you ever save money if the government could just take almost half of what you saved? That's after paying taxes on making it in the first place.
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National spending causes inflation and national taxation removes that inflation.
National spending has nothing to do with inflation. Governments printing additional money is what drives inflation whether that money is spent out by the government or a central bank loans it out privately.
For the poorest the tax rate should be effectively negative and beyond a certain point it should be in excess of 90%.
I'd disagree on both counts. In the first, I believe that everyone should pay tax or they lack any skin in the game and don't pay the necessary attention to what government is doing. People who don't pay for something, tend not to care if the government spends foolishly. After all, it's not their money. H
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The peak tax rate in the 1950s was over 90% (on incomes > $200K, about $2M today), under a Republican president. The economy thrived. Because there wasn't such an extreme wealth disparity then, only about 10,000 households paid the peak rate.
Keep in mind this was incrementally on the amount of income that exceeded $200K. The overall tax rate for these people was maybe 45-50%. And capital gains tax was much lower, as it is today.
The average overall tax rate today is close (Score:2)
> The overall tax rate for these people was maybe 45-50%.
I'm not sure about the overall tax rate on that specific group at that time, but 45% is one to the average overall tax rate today, for taxpayers.
You make $100, the government first takes 7.5% (really 15%) FICA tax, then an additional 25% income tax. You use some of that money to buy a gallon gas for $3, the government takes another 13%. That's 45.5% total tax.
The gas goes in your car which is taxed every year. I put $24,000 into buying a h
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You make $100, the government first takes 7.5% (really 15%) FICA tax, then an additional 25% income tax. You use some of that money to buy a gallon gas for $3, the government takes another 13%. That's 45.5% total tax.
Some time ago I took the trouble to add up all my taxes paid during one bad year and discovered that the dollar amount of taxes divided by my before taxes wages (good wages for IT, not great) came to about 34%. So your rough estimate is a good example, but you can't add percents of varying quantities the way you did. The different taxes have to pro-rated before adding.
You don't spend all your money on gasoline, so you have to pro-rate that tax. If you spent $5 on gasoline (5% of your earnings), then you wou
Yes, thousands of pages of tax law. (Score:3)
It can of course get very complicated - the total tax depends on what portion you spend on housing, how much you spend on gas, etc. There are thousands of pages of tax law (between 4,500 and 75,000, depending on how you count), so my quick explanation can't be accurate for any given person's actual liability in a given year. That being obvious, I did take a short cut with the math.
The point being your money is taxed:
Before it's written on your pay stub (the "secret" 7.5% + more the employer isn't allowed
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The content of, and presentation style, reminded me more of an ad than some news article.
Yeah, and a pretty tone-deaf one at that. Guess what, Aegon Retirement Readiness Survey 2018? Not all of us have a barcalounger made from the dragonfire-melted swords of a thousand vanquished enemies to retire to, you insensitive clods!
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