[quote]Whatever I inherit is going into a relatively safe retirement vehicle. We are in our early 50s and have to worry about retirement now. Social Security ain’t gonna cut it, and I feel sorry for people younger than we are who probably won’t get any at all. We are not as financially astute as my dad, although we did save up enough for a 10 percent down payment on our first house in 1986/87 (can’t remember!) but had to pay PMI for the first few years. Also, we saved enough in a 529 plan to fina[/quote]
Thread hijack.
1) Oops. I really didn’t mean to call you “kid” earlier. Sorry about that. No offense meant, especially to my elders, as you’ll be able to figure out below…
2)Whenever, I hear Baby Boomers talk about their future/retirement/healthcare and Social Security.. I can’t help but chuckle…Because the way I look at it, it’s nowhere near going to be as bad for Baby Boomers as it is going to be for Generation Xer’s. Metaphorically speaking, you folks will catch a cold only in the later part of your golden years…Meanwhile, generation Xer’s will have a pneumonia AND also be the ones expected to nurse your cold. And there will be a hell of a lot more of you than of us.
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Unfortunately, you’re going to probably have it rougher than your dad. Those folks (including my parents) are/have retired relatively rich, with excellant company benefits, pensions, relatively cheap(er) health care, low taxes, political/economic stability in the nation (ok sort of). Yes, their taxes in their golden years most likely *will* be lower than in their working years.
You and your wife, on the other hand, are retiring when health care is going to be a lot higher, taxes are going to be higher, economy is going to be a little more uncertain…and a lot more of you are going to be retiring at the same time. Social Security (like you said) really isn’t going to cut it alone, though you’ll at least get your cut. But that’s not the main problem, because your SS benefits should not run out until your generation goes on to greener pastures…You are more likely going to run into problems with medicare, which last time i checked is significantly *worse* funded than SS, especially with health care costs spiraling out of control. You won’t run into this problem initially. It will be toward the end of your golden years…But it will be a problem, simply because the system isn’t going to support so many Baby Boomers for that long a period of time. And to make matters worse, some of those companies that promised folks of your generation pensions/healthcare will have long gone bankrupt and not be able to help your generation that it promised. Airlines and US auto workers come to mind, as well as general under-funded pensions and pension plans that took a gamble on all these mortgage back securities (I hope there wasn’t that many).
However, generally, I think most of your golden years will still be ok. You might end up paying more taxes in your golden years than working years.. But you folks probably did a better job saving than folks of my generation.
Generation X’ers have 3 problems on hand
1)Selfishness: Generation-Xer’s are more self-satifying in the near term, and probably do a much shittier job planning for our future. Hence, a good portion of us are terrible savers and probably have no viable post-retirement plan.
2)Shift of retirement risk to individuals: It started in your generation, but is more pronounced in mine… Most of our employers have pulled the retirement rug underneath us, by shifting all the retirement savings/healthcare risk directly to individuals. A lot of us haven’t realized this yet and aren’t planning for this, and even the people who have figured this out, some lack ability and will f* it up. Hence, our generation is even more dependent on a Federal system.
3)Federal System Exhausted: meanwhile, imho federal programs (unless drastically changed) will be fully utilized and exhausted from a large BabyBoomer population. Simply put, there are more people retiring and less people working to prop up the system when BabyBoomers retire. All that shortfall is going to be made up by Generation X paying a hell of lot more taxes. Plus i believe Generation Y that follows us is going to be even smaller, so either they will pay even more taxes or our benefits are going to be cut.
….Unless something drastically changes, 1+2+3 is not good for Generation Xer’s in the Golden Years.
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Generation X is a generation who had it much easier than others. We tend to be more whiny/bitchy/needy/entitled/”me too”ish (at least the younger versions of us). We take a lot for granted, and as such, folks in my generation aren’t use to saving and planning for the future. Instant gratification is the key. We grew up on credit and financing everything…Ok this wasn’t completely our fault, a lot of this we learned from folks of your generation. But, we took it to another extreme. Forget counting on us to take care of you, a good % of us won’t be able to manage our own bills.
Well, at least some of the Baby Boomers have pension and retiree health benefits….. Most of Generation X’ers employers already make us pay for our healthcare, and those health plans disappear once we no longer are employed there. And retirement pension? What’s that? Does not compute for us…..Most of our employers shifted burden of retirement planning from a “guaranteed plan”, to optional self-managed 401k plans.
Being optional, a good portion of us don’t participate in a 401k plan to the maximum amount, if at all..Yes, some of us save/invest in “better” self-managed plan and have the discipline to save without using a 401k plan. However, a higher percentage of us don’t participate in 401k because we “need” that money now (in today’s dollars) in order to live.
Definitional clarification. “NEED” is something that is absolutely essential to living..By Generation X’ers standard that includes: BMW’s, iPhones, the latest computers, Coach bags, 42″ LCD/plasmas… This is different from “wants”: which are more like Ferraris, Prada bags, trips around the world, 60+” LCD/plasmas, etc. Confused? Thought so..Hence the issue with Generation Xer’s savings.
….Back to retirement funds for Generation X’ers. For those of us that do participate in a 401k plan, some employers (and it really is a few employers) “match” an employee’s contribution up to an amount ($6k/ per year approximately). I guess this was the sorry excuse substitute for a “pension plan” they no longer offer…. Ah, but there’s even a catch for this…That assumes you would work with that employer for XXXX number of years…. We have long figured out that there is no such thing as job security, and hence most of us who are slightly smarter never stay at the same employer for a long time… Because often times, staying at an employer means being pigeon-holed and letting our skills rot…steadily becoming more unemployable, only to be backstabbed by our employer who eventually axes us in our older years, replaced with 20 year-old college grad counterparts that is willing to work twice as hard and paid 1/2 as much, naively awed about the company’s generous “401k matching plan” pitched in his new hire orientation. Hence, a lot of times the matching amount is ineligible.
Healthcare: we won’t have a health care plan after we retire, either from our former employer nor from the government (because the government’s one will have cratered by then unless drastically changed).
Furthermore, we are in worse shape than you….physically…. A lot of a us are fat( sorry, i meant vertically and horizontally challenged…Our generation is excessively obsessed with political correctness so as to not be offended by what we really are…fat). Growing up with McDonalds and super-sizing does this to one’s health. In fact, this is such a problem, clothes manufacturers and retailers find it easier by just lying and labeling an size 7 outfit as size 4 so as to not make someone “feel fat”. So there is little incentive to really get in shape, because everything else around us changes to meet our body’s out-of-shape. Just look at the size of our cars, and what they’re doing at Disney’s It’s a Small World to overcome fat people bottoming out the rides.
As such, no wonder health care costs are rising. Most of us won’t be able to afford decent healthcare without proper planning. There are some federal tax-advantaged healthplan savings account, similar to the way pre-tax retirement accounts work…These are called the HSA (Archer plans). There has been some activity to try to expand their benefits. However, there has also been sharp criticism from some congresspeople that it unfairly benefits the “wealthy” and the doesn’t solve the real problem. Yet critics have yet to offer any alternatives. So healthcare reform is stalemated (I won’t mention political affliation here, that’s not the point….article here: http://www.medicalnewstoday.com/articles/104884.php
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Anyway, Generation Xer’s we are going to end up paying taxes until our nose bleeds to support a SS and medicare program that won’t won’t sustain us unless drastically changed..It’s why some gen X’s (who aren’t brain rotten from watching britney spears) are adopting the selfish stance trademarked with our generation and are a huge proponent of abolishing SS and medicare… or at least drastically restructure it such that we benefit from our dollar contributes at 50cents on the dollar, thereby inevitably reducing your generation’s benefits….The problem with this, however, is there are far more baby boomers that would vote against this proposal than there would be Generation X’s that would vote for this proposal…So a concrete/viable overhaul most likely won’t be proposed by any presidential candidate that wants to win an election.
That said, I *hope* some reform will come about our Federal programs before things crash and burn….But like so many self-serving Generation Xer’s (the ones that haven’t brain rotten yet from all that Britney Spears drama), we’ve given up on a Federal’s programs and the Fed’s ability to manage money… Beyond paying the taxes we are forced to pay for whatever flavor of the month cause, we’re just taking our financial advisor(s) advice and fending for ourselves and our family, sheltering whatever we can. Perhaps the Millenium generation and my child(ren) will be smarter than us.
I know i know. I sound pretty pessimistic. But you know, ironic I’m actually a pretty jovial guy. It could be worse, relatively speaking, we could be living a a third world country without food/water/shelter. It’s also why, frankly, I’m not too worried about a tax reassessment. I think that’s one of the smallest things to worry about in the future :).
