Comments on: Retirement Lies We Tell Ourselves http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Thu, 24 May 2012 12:43:16 +0000 hourly 1 http://wordpress.org/?v= By: fin_indie http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/comment-page-1/#comment-54639 fin_indie Sat, 16 Dec 2006 14:53:02 +0000 http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/#comment-54639 Interesting story. If you read the BW article, however, it's clear that they are spinning the data so they have the appearance of a story. Saying "about a quarter" means that less than 25% of people over 70 are carrying mortgages into retirement, which means that more than 75% of those people are not. Also, looking at the trend, 25%-19.9% equals only a 5% rise over a 20 year period. That's minuscule. Similarly, you only have a 10% rise over 20 years for those in their 60s. That's marginally significant. Most of these people are not retired yet. It would be interesting to know the size of the remaining mortgages for these folks, however, and whether or not these mortgages are second homes /retirement homes, or if they are on primary homes. All of these variables are important when looking at broad statistics such as these. Finally, your comment about boomers being in a more "difficult financial situation": For every study you show me that outlines difficulty, I'll show you one that says they're in great shape. In short, I think there is still a lot of debate over the condition of the boomers' situation. BTW, This is a great discussion to have. Take my response as fodder for healthy debate, not a defensive response. :) Interesting story. If you read the BW article, however, it’s clear that they are spinning the data so they have the appearance of a story. Saying “about a quarter” means that less than 25% of people over 70 are carrying mortgages into retirement, which means that more than 75% of those people are not. Also, looking at the trend, 25%-19.9% equals only a 5% rise over a 20 year period. That’s minuscule.

Similarly, you only have a 10% rise over 20 years for those in their 60s. That’s marginally significant. Most of these people are not retired yet. It would be interesting to know the size of the remaining mortgages for these folks, however, and whether or not these mortgages are second homes /retirement homes, or if they are on primary homes. All of these variables are important when looking at broad statistics such as these.

Finally, your comment about boomers being in a more “difficult financial situation”: For every study you show me that outlines difficulty, I’ll show you one that says they’re in great shape. In short, I think there is still a lot of debate over the condition of the boomers’ situation.

BTW, This is a great discussion to have. Take my response as fodder for healthy debate, not a defensive response. :)

]]> By: Jeremy http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/comment-page-1/#comment-53769 Jeremy Thu, 14 Dec 2006 01:55:30 +0000 http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/#comment-53769 Well my first post got caught in the spam filter with the link, so let me try this again. Anyway this information is from 2000, but it shows a scary trend: "About a quarter of U.S. census respondents aged 70 and older reported having a mortgage in 2000, up from 19.9% in 1980. The number of census respondents in their 60s with a mortgage rose to 44.6%, from 34% two decades earlier." In 2000 people who were just a few years from, or already retired almost half had a mortgage and 25% of those in their 70's still had one. Those are alarming numbers and these aren't even the boomers yet, who are generally speaking in a more difficult financial situation. I don't see the trend they are showing reversing any time soon. http://www.businessweek.com/investor/content/sep2006/pi20060927_200953.htm?chan=investing_investing+funds Well my first post got caught in the spam filter with the link, so let me try this again. Anyway this information is from 2000, but it shows a scary trend:

“About a quarter of U.S. census respondents aged 70 and older reported having a mortgage in 2000, up from 19.9% in 1980. The number of census respondents in their 60s with a mortgage rose to 44.6%, from 34% two decades earlier.”

In 2000 people who were just a few years from, or already retired almost half had a mortgage and 25% of those in their 70′s still had one. Those are alarming numbers and these aren’t even the boomers yet, who are generally speaking in a more difficult financial situation. I don’t see the trend they are showing reversing any time soon.

http://www.businessweek.com/investor/content/sep2006/pi20060927_200953.htm?chan=investing_investing+funds

]]> By: fin_indie http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/comment-page-1/#comment-53679 fin_indie Wed, 13 Dec 2006 16:18:55 +0000 http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/#comment-53679 I think the point I was trying to make by highlighting my own situation is that this one-size-fits-all advice isn't worth much. Although I don't have the stats on how many people retire with a mortgage, I have a hard time believing it's most people. My parents who aren't quite retired yet have had their home paid off for a few years already and they REALLY dragged it out with refi's. I don't consider them particularly financially savvy, and even they won't have a mortgage when they eventually retire. I think the point I was trying to make by highlighting my own situation is that this one-size-fits-all advice isn’t worth much. Although I don’t have the stats on how many people retire with a mortgage, I have a hard time believing it’s most people.

My parents who aren’t quite retired yet have had their home paid off for a few years already and they REALLY dragged it out with refi’s. I don’t consider them particularly financially savvy, and even they won’t have a mortgage when they eventually retire.

]]> By: Jeremy http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/comment-page-1/#comment-53582 Jeremy Tue, 12 Dec 2006 20:36:17 +0000 http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/#comment-53582 RetiringEarly, this may be very true for both younger adults and those who are already retired, but in reality a very high percentage of the boomer generation who are geared up to retire soon do not face the same situation. Most are STILL paying a mortgage because they bought a new home in the past 10-15 years and have a typical 30-year fixed. Many people during the housing boom purchased a new home, and many upgraded to a more expensive home. My parents did it, my in-laws did it and I'd say about half of my clients I meet with who are around 50 did it. They may be retire at 65 and still have 10 or more years left on a $2,000+ mortgage. Those who retire early have even longer. It is easy for us to see how easy it would be to live off of very little of our current income provided we don't have a mortgage or other large monthly payments, but the reality is that most people are not in this financial situation. RetiringEarly, this may be very true for both younger adults and those who are already retired, but in reality a very high percentage of the boomer generation who are geared up to retire soon do not face the same situation. Most are STILL paying a mortgage because they bought a new home in the past 10-15 years and have a typical 30-year fixed. Many people during the housing boom purchased a new home, and many upgraded to a more expensive home. My parents did it, my in-laws did it and I’d say about half of my clients I meet with who are around 50 did it. They may be retire at 65 and still have 10 or more years left on a $2,000+ mortgage. Those who retire early have even longer.

It is easy for us to see how easy it would be to live off of very little of our current income provided we don’t have a mortgage or other large monthly payments, but the reality is that most people are not in this financial situation.

]]> By: fin_indie http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/comment-page-1/#comment-53562 fin_indie Tue, 12 Dec 2006 16:28:25 +0000 http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/#comment-53562 I read this article and I think it's easy to be shocked by some of them because most pf bloggers just simply know better. The one that kills me is the 70%-80% pre-retirement income one. There have been tons and tons written on this. Do the math. You don't need that much. Really. There are a lot of variables, but consider: 1. I currently save 45% of my income. 2. I give away almost $2000 per month for a mortgage that will be paid off by time I retire. Those two facts alone should tell you that I don't need 80% of my income to retire. <a HREF="http://retiringEarly.Blogspot.com" rel="nofollow">RetiringEarly.com</a> I read this article and I think it’s easy to be shocked by some of them because most pf bloggers just simply know better.

The one that kills me is the 70%-80% pre-retirement income one. There have been tons and tons written on this. Do the math. You don’t need that much. Really. There are a lot of variables, but consider: 1. I currently save 45% of my income. 2. I give away almost $2000 per month for a mortgage that will be paid off by time I retire. Those two facts alone should tell you that I don’t need 80% of my income to retire.

RetiringEarly.com

]]> By: Matt http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/comment-page-1/#comment-53559 Matt Tue, 12 Dec 2006 15:54:22 +0000 http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/#comment-53559 What a list, I can't beleive that people can honestly belive those! When it comes to retirement how can you be comfortable with debt!?! That's just someone with their head in the sand hoping reality won't bite them on the ass. What a list, I can’t beleive that people can honestly belive those! When it comes to retirement how can you be comfortable with debt!?! That’s just someone with their head in the sand hoping reality won’t bite them on the ass.

]]> By: Russell Bailyn http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/comment-page-1/#comment-53447 Russell Bailyn Tue, 12 Dec 2006 06:07:27 +0000 http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/#comment-53447 I think numbers one and two are particularly prevalent. The idea of downsizing a home after the kids move out b/c you don't need the space is very real. It's geat for an additional nestegg. But, people use "generous" assumptions when figuring out how much they can monetize their homes. Assumptions include the listing price, the selling price, the price of a new home, taxes, moving, furnishing, flying, etc! Working in retirement? Good luck earning even a fraction of your pre-retirement income unless you're up and running prior to retirement. I think numbers one and two are particularly prevalent. The idea of downsizing a home after the kids move out b/c you don’t need the space is very real. It’s geat for an additional nestegg. But, people use “generous” assumptions when figuring out how much they can monetize their homes. Assumptions include the listing price, the selling price, the price of a new home, taxes, moving, furnishing, flying, etc! Working in retirement? Good luck earning even a fraction of your pre-retirement income unless you’re up and running prior to retirement.

]]> By: Lazy Man and Money http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/comment-page-1/#comment-53446 Lazy Man and Money Tue, 12 Dec 2006 05:46:07 +0000 http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/#comment-53446 Hmm, my spouse is in the military. That covers a portion of 1) My spouse will take care of everything 2) We're going to get a pension and it's safe (Uncle Sam is going to eliminate the military pensions?) 3) I do plan to work in retirement as well (as a software engineer I think this is reasonable) All that said, I'm still putting 15K in 401k and 4K in my Roth. Still, I think some of these aren't necessarily lies. Hmm, my spouse is in the military. That covers a portion of 1) My spouse will take care of everything 2) We’re going to get a pension and it’s safe (Uncle Sam is going to eliminate the military pensions?) 3) I do plan to work in retirement as well (as a software engineer I think this is reasonable)

All that said, I’m still putting 15K in 401k and 4K in my Roth. Still, I think some of these aren’t necessarily lies.

]]> By: Debt Hater http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/comment-page-1/#comment-53441 Debt Hater Tue, 12 Dec 2006 05:06:07 +0000 http://allfinancialmatters.com/2006/12/11/retirement-lies-we-tell-ourselves/#comment-53441 Wow, who's telling themselves any of those!? I read each one and thought, that's dumb. Well, except the one about living on just 70%-80% of current income, I might have thought the same thing once upon a time until I used some of the retirement calculators and saw how little that was when you consider that everything is going to continue to get more expensive. Wow, who’s telling themselves any of those!? I read each one and thought, that’s dumb. Well, except the one about living on just 70%-80% of current income, I might have thought the same thing once upon a time until I used some of the retirement calculators and saw how little that was when you consider that everything is going to continue to get more expensive.

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