Author Topic: Many middle-class Americans plan to work until they die  (Read 14800 times)

dragoncar

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daverobev

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Re: Many middle-class Americans plan to work until they die
« Reply #1 on: October 24, 2013, 10:30:45 AM »
Painful. So very... not self-obsessed exactly, self-destructive. I'm going to shoot myself in the foot and then complain about it.

True, though, that student loan stuff just can't go on. It's completely unfair to give hundreds of thousands of dollars of debt to children who don't really know what it means. Even tens of thousands - it's soul destroying, it's a ball and chain, it's almost slavery.

ScienceSexSavings

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Re: Many middle-class Americans plan to work until they die
« Reply #2 on: October 24, 2013, 10:31:43 AM »
From the comments:

"If you're on the younger side of 40 and you think you're going to retire at the same age as your parents you probably aren't being realistic or you're exceptional."

24, haven't finished school yet, live in a relatively expensive city, and plan to do it!

dragoncar

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Re: Many middle-class Americans plan to work until they die
« Reply #3 on: October 24, 2013, 10:44:55 AM »
What's sad is that reddit has a pretty active frugal community.  This was posted in politics so I guess it brings out a different animal.  I haven't seen a single comment disputing the premise yet!

smalllife

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Re: Many middle-class Americans plan to work until they die
« Reply #4 on: October 24, 2013, 10:56:50 AM »
I still don't understand how people think this is actually a possibility!  They get old, they don't learn, can't keep up, become liabilities, get hurt, etc. etc. - a thousand reasons why they might not be able to work until they die.  As if the thought of doing so wasn't depressing enough . . .


jrhampt

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Re: Many middle-class Americans plan to work until they die
« Reply #5 on: October 24, 2013, 11:21:19 AM »
I still don't understand how people think this is actually a possibility!  They get old, they don't learn, can't keep up, become liabilities, get hurt, etc. etc. - a thousand reasons why they might not be able to work until they die.  As if the thought of doing so wasn't depressing enough . . .

Exactly.  I can already see this happening in the not so distant future, and I'm only in my thirties!

footenote

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Re: Many middle-class Americans plan to work until they die
« Reply #6 on: October 24, 2013, 12:03:06 PM »
I still don't understand how people think this is actually a possibility!  They get old, they don't learn, can't keep up, become liabilities, get hurt, etc. etc. - a thousand reasons why they might not be able to work until they die.  As if the thought of doing so wasn't depressing enough . . .

Exactly.  I can already see this happening in the not so distant future, and I'm only in my thirties!
Yeah, I read an interview in which a retirement expert said that those saying they will work into old age / until death don't understand that they will most likely be forced to stop working involuntarily (layoff, disability, etc.). She sees this all the time and calls it "cliff retirement" (as in: "fall off the...").

SisterX

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Re: Many middle-class Americans plan to work until they die
« Reply #7 on: October 24, 2013, 12:17:38 PM »
Found one!  "It may not be for everyone, certainly I don't know if it's right for you (or if I could talk my wife into it for that matter) but I've definitely taken away the lesson that if you don't need to own a million things and live in 2,000-3,000 square foot house life can still be just fine."

Good guy commenter points out the obvious to those who can't see it.  Out of curiosity, was this one of you?

randymarsh

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Re: Many middle-class Americans plan to work until they die
« Reply #8 on: October 24, 2013, 12:34:08 PM »
I liked the comment "I can't make any money, all I have is a computer and a guitar." Right because no one has ever made money with either of those items.

I think know I've had it pretty good in life so maybe that's why I feel like success isn't impossible if you're willing to put in an ounce of effort? I don't know if I'm outrageously optimistic or simply naive.

El Gringo

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Re: Many middle-class Americans plan to work until they die
« Reply #9 on: October 24, 2013, 12:35:40 PM »
In other awful news, HelloWallet found that 60% of Americans who contributed to their 401k were accumulating more debt (often times credit card) faster than they are contributing to their 401k's: http://www.washingtonpost.com/business/economy/many-americans-accumulating-debt-faster-than-theyre-saving-for-retirement/2013/10/23/b7a9c85e-3b3e-11e3-b6a9-da62c264f40e_story.html

randymarsh

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Re: Many middle-class Americans plan to work until they die
« Reply #10 on: October 24, 2013, 04:20:47 PM »
^ No problem, I'll take a 401k loan to pay off my CC debt.

SwordGuy

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Re: Many middle-class Americans plan to work until they die
« Reply #11 on: October 24, 2013, 05:25:40 PM »
True, though, that student loan stuff just can't go on. It's completely unfair to give hundreds of thousands of dollars of debt to children who don't really know what it means.

Agreed.  Except, of course that they are LEGAL ADULTS and it's THEIR OWN F'N RESPONSIBILITY to know what that means.

It's not my fault they didn't pay attention in high school math class or in science class to learn about compounding growth.  It's not my fault they didn't pay attention in high school civics or US history class about the boom and bust cycle, or the problems folks had who were in too much debt when the bust cycle began.  It's not my fault they didn't pay attention to history or current events every time the gas prices skyrocketed.  And it's not my fault they have BTSD syndrome and have to drive a big truck to compensate for their lack of manhood.

Even tens of thousands - it's soul destroying, it's a ball and chain, it's almost slavery.

That's pure horseshit.  People buy $30,000 to $60,000 cars all the time and no one is up in arms about how downtrodden they are.

Median student loan debt is about $24,000.    That's perfectly affordable for damn near anyone.   It's less than the median car price in the US, which is close to $31,000 - and folks are paying those of in 5 to 7 years day in and day out.

daverobev

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Re: Many middle-class Americans plan to work until they die
« Reply #12 on: October 24, 2013, 06:52:36 PM »
True, though, that student loan stuff just can't go on. It's completely unfair to give hundreds of thousands of dollars of debt to children who don't really know what it means.

Agreed.  Except, of course that they are LEGAL ADULTS and it's THEIR OWN F'N RESPONSIBILITY to know what that means.

It's not my fault they didn't pay attention in high school math class or in science class to learn about compounding growth.  It's not my fault they didn't pay attention in high school civics or US history class about the boom and bust cycle, or the problems folks had who were in too much debt when the bust cycle began.  It's not my fault they didn't pay attention to history or current events every time the gas prices skyrocketed.  And it's not my fault they have BTSD syndrome and have to drive a big truck to compensate for their lack of manhood.

Even tens of thousands - it's soul destroying, it's a ball and chain, it's almost slavery.

That's pure horseshit.  People buy $30,000 to $60,000 cars all the time and no one is up in arms about how downtrodden they are.

Median student loan debt is about $24,000.    That's perfectly affordable for damn near anyone.   It's less than the median car price in the US, which is close to $31,000 - and folks are paying those of in 5 to 7 years day in and day out.

While I'd agree with you in theory, I don't believe it's like that in practise. And, at 18, I know that I knew very little about 'life' - my opinion is that we'd be better off having a system where young adults work for 2-4 years after finishing school, and THEN make the choice as to whether or not they'd like to go to university.

And while $24k might be affordable to anyone, it's hard if you've only got a minimum wage job, or no job, and the truth is it's not $24k - it's $24k plus who knows how much interest - it's all about compounding and it works both ways. If you're in the black and have the surplus invested, wahey, free money! But if you're in the red... it's a continual drain until you finally kill the thing.

We're a bit bi-polar about 'children' - treat them like babies, but treat them like grizzled veterans, all at the same time. Not good.

Disclaimer: I am not American, and I don't live in the USA either.

SisterX

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Re: Many middle-class Americans plan to work until they die
« Reply #13 on: October 24, 2013, 07:18:57 PM »
^^  I agree that the minimum wage jobs is where a big portion of the problems lie, in terms of paying off student loans.  And if you look at the statistics, it's borne out because even college grads are having to cobble together part-time, minimum wage jobs.  Middle aged people were affected by the recession mostly because they'd either spent the money from their good jobs stupidly and accrued massive amounts of debt, or because their retirement portfolios went down, or both.  And they expect (and get!) sympathy, from the public, the media, and politicians.  However, younger people (and older workers, 50+) have been severely affected by what type of job they can get.  It's not about, "Cool, what type of job did you get?", it's, "You got a job?  That's awesome!"  When you have adults saying, "Go to school, no matter the cost, it's the only way to get a good job," then you get out and can barely find minimum wage jobs, having people tell you you were stupid for getting student loans in the first place is not helpful.  (I am saying this as someone who's slightly older than the most affected demographic, who's been lucky enough to have a steady, full-time job since graduating, and who didn't get student loans.  But I've seen the shit that my friends and my spouse have had to put up with, in terms of employment.  Your little rant does zero to fix any of the problems which are making the student loans such a mess in the first place.)
daverobev has an excellent point about treating anyone under 18 as irresponsible children, then suddenly at 18 expecting them to be adults, knowledgeable about the world.  I don't know about anyone else, but I was clueless about the world at 18.  Better and more knowledgeable than a lot of people are, but still pretty dumb.  Somehow you expect kids to grow up just because their legal status changed?  SwordGuy, if you want all those newly legal adults to take their own "F'N RESPONSIBILITY", I suggest that it's our job as adults, ALL adults, to teach them before they attain their legal majority, rather than castigating them for not knowing it already.  You say it's not your fault?  Of course it is!  It's the fault of every fucking adult in this nation if the basics of financial literacy, and taking care of oneself, and everything else we expect kids to know by the time they're legally adults, doesn't get passed along.  That is OUR responsibility.  The "not my problem" attitude is complete bullshit.  You aren't a pillar, you are an individual within a community.  And problems in a community don't just affect the individuals, there are ripple effects to everyone else.

ScienceSexSavings

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Re: Many middle-class Americans plan to work until they die
« Reply #14 on: October 24, 2013, 07:33:51 PM »

While I'd agree with you in theory, I don't believe it's like that in practise. And, at 18, I know that I knew very little about 'life' - my opinion is that we'd be better off having a system where young adults work for 2-4 years after finishing school, and THEN make the choice as to whether or not they'd like to go to university.

And while $24k might be affordable to anyone, it's hard if you've only got a minimum wage job, or no job, and the truth is it's not $24k - it's $24k plus who knows how much interest - it's all about compounding and it works both ways. If you're in the black and have the surplus invested, wahey, free money! But if you're in the red... it's a continual drain until you finally kill the thing.

We're a bit bi-polar about 'children' - treat them like babies, but treat them like grizzled veterans, all at the same time. Not good.

Disclaimer: I am not American, and I don't live in the USA either.

I second all of this. This is one of the tings I like about the CÉGEP system in Québec - students finish high school a year earlier with only 5 years of seconday school, and can enter the workforce immediately if they choose. If they want to carry on, they go to CÉGEP and take either a technical program, which is similar to community college and lasts 3yrs before spitting you out into the workforce, or a pre-university program, which follows up on secondary schooling and lasts 2 years. Fees are only a few hundred per year, but students can go anywhere in the province and must apply for admission, may live in residence or an apartment if they're away from home, etc. Basically, they get a preview of university life at a much, much lower cost that still leaves you with something more than a high school diploma before the time comes to decide whether or not to go to university. Mind you, tuition is also quite cheap for a Québécois studying in Québec...

SwordGuy

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Re: Many middle-class Americans plan to work until they die
« Reply #15 on: October 24, 2013, 08:15:53 PM »
I would argue that a veritable host of American elementary and high school students spend a lot of effort making damn sure they don't learn the material being taught to them.

It was that way when I was a kid and it's still that way now.

You can lead a horse to water but you can't make it drink.

You can, however, encourage it to.

Now, I'm perfectly willing to add a financial competence course to the high school curricula.  Of course, its content will soon be owned by the consumer sales industry, but I'm still willing to give it a try.

I'm even willing to refuse to give any welfare or government assistance or free medical care to people who are mentally and physically able to graduate from high school and choose not to do so.  I'm willing to give just 1/2 unemployment benefits to the same group.  I'm willing to double prison sentences while they don't have a degree.  (But provide high school classes in prison and in the evenings at high school.)

I'm willing to pay taxes to double teacher's salaries provided administrative, staff and coaching salaries aren't raised, too.  I'm willing to gut the federal and state departments of education and give local school systems almost 100 string-free money direct to the school districts.  Only strings would be (a) no federal or state money goes to coaches beyond basic teacher pay for gym class, (b) no money for intra-school sports activities, and (c) no money for administrative or staff salaries beyond basic entry level teacher pay.  Those strings are to prevent wasting our money on damn football teams and bloating the local bureaucracy with non-teacher positions.

I'm willing to gut the college level education departments and get them out of the task of destroying our next crop of teachers. 

I'm willing to fine students and parents if the students don't do their homework or don't pass the class (and they are mentally and physically able to do so).  I'm willing to make parents and students sign a code of contact and fine them if they don't live up to it.

I'm also willing to fine teachers who inflate grades or do social promotion instead of learning-based promotion.

Tough love and plenty of funding.  It will take both.  Just money will fail.

fragglebock

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Re: Many middle-class Americans plan to work until they die
« Reply #16 on: October 24, 2013, 09:20:43 PM »
Quote
Quote
True, though, that student loan stuff just can't go on. It's completely unfair to give hundreds of thousands of dollars of debt to children who don't really know what it means.

Agreed.  Except, of course that they are LEGAL ADULTS and it's THEIR OWN F'N RESPONSIBILITY to know what that means.

+1

College students are NOT children.  They are adults.  Treat them as such - the legal and banking systems do.

randymarsh

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Re: Many middle-class Americans plan to work until they die
« Reply #17 on: October 24, 2013, 10:28:55 PM »
Agreed.  Except, of course that they are LEGAL ADULTS and it's THEIR OWN F'N RESPONSIBILITY to know what that means.
+1

College students are NOT children.  They are adults.  Treat them as such - the legal and banking systems do.
[/quote]

Except when it comes to consuming alcohol. And opening credit cards. And running for office.

Jamesqf

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Re: Many middle-class Americans plan to work until they die
« Reply #18 on: October 24, 2013, 10:42:33 PM »
And, at 18, I know that I knew very little about 'life' - my opinion is that we'd be better off having a system where young adults work for 2-4 years after finishing school, and THEN make the choice as to whether or not they'd like to go to university.

Nothing is stopping people from doing that now - in the US, anyway: I gather that in Europe it's much more difficult to follow a non-conventional path.  I didn't get my BS until I was in my mid-30s, in large part because when I graduated from high school, student loans weren't available (at least to people like me).  Nor would I have made it through then if I hadn't been able to get (comparatively modest) student loans.

Quote
And while $24k might be affordable to anyone, it's hard if you've only got a minimum wage job, or no job...

So what were you studying in college that only gets you a minimum-wage job?

Leisured

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Re: Many middle-class Americans plan to work until they die
« Reply #19 on: October 25, 2013, 01:32:15 AM »

I agree with SwordGuy that there is a sizeable minority that is determined not to learn much in school. I see a second problem too; how many people have the intelligence to make the connection between what they learn at school (assuming they do learn) and what happens in the outside world? Consider the posts in Investor Alley on this forum. How many people have the intelligence to understand investment? Any investment, even an easy one like rental properties? 60% perhaps?

All rich countries have spent up big on education for sixty years. I can remember Australian education in the late fifties, and big spending on education was new at the time, and people occasionally commented on the spending. The limiting factor is no longer money and effort, but the intelligence of the students.

Assuming that schools start to teach the fundamentals of finance, I see a three step process.
A student has to have the intelligence to understand the material.
A student has to make the connection between what he learns, and what happens in the outside world.
A student has to allow herself to be guided in financial affairs by mathematical reasoning rather than impulse.

In Australia we use the term ‘yobbo’ to refer to someone who is unintelligent, ignorant and irrational, and who is proud to be so. Plenty of yobbos in the world. There is a substantial yobbo subculture in Australia, and that will hold for all rich countries. Education does not solve the yobbo problem.

daverobev

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Re: Many middle-class Americans plan to work until they die
« Reply #20 on: October 25, 2013, 09:14:29 AM »
And, at 18, I know that I knew very little about 'life' - my opinion is that we'd be better off having a system where young adults work for 2-4 years after finishing school, and THEN make the choice as to whether or not they'd like to go to university.

Nothing is stopping people from doing that now - in the US, anyway: I gather that in Europe it's much more difficult to follow a non-conventional path.  I didn't get my BS until I was in my mid-30s, in large part because when I graduated from high school, student loans weren't available (at least to people like me).  Nor would I have made it through then if I hadn't been able to get (comparatively modest) student loans.

Quote
And while $24k might be affordable to anyone, it's hard if you've only got a minimum wage job, or no job...

So what were you studying in college that only gets you a minimum-wage job?

"Europe" is not a country. Germany is *vastly* different than the UK.

I studied Chemistry at uni, which was a huge mistake, and ended up doing database stuff for smaller companies - but I started out doing data entry as a temp (which led to a position at that company because I'm not a numpty). The thing is, half these people *are* numpties. That's not my fault, it's not their fault, it's not the system's fault *directly*. People are just doing what makes sense so they think. Unfortunately... it doesn't.

dragoncar

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Re: Many middle-class Americans plan to work until they die
« Reply #21 on: October 25, 2013, 10:57:01 AM »
And, at 18, I know that I knew very little about 'life' - my opinion is that we'd be better off having a system where young adults work for 2-4 years after finishing school, and THEN make the choice as to whether or not they'd like to go to university.

Nothing is stopping people from doing that now - in the US, anyway: I gather that in Europe it's much more difficult to follow a non-conventional path.  I didn't get my BS until I was in my mid-30s, in large part because when I graduated from high school, student loans weren't available (at least to people like me).  Nor would I have made it through then if I hadn't been able to get (comparatively modest) student loans.

Quote
And while $24k might be affordable to anyone, it's hard if you've only got a minimum wage job, or no job...

So what were you studying in college that only gets you a minimum-wage job?

"Europe" is not a country. Germany is *vastly* different than the UK.

I studied Chemistry at uni, which was a huge mistake, and ended up doing database stuff for smaller companies - but I started out doing data entry as a temp (which led to a position at that company because I'm not a numpty). The thing is, half these people *are* numpties. That's not my fault, it's not their fault, it's not the system's fault *directly*. People are just doing what makes sense so they think. Unfortunately... it doesn't.

All y'all currency look alike

daverobev

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Re: Many middle-class Americans plan to work until they die
« Reply #22 on: October 25, 2013, 12:01:41 PM »
All y'all currency look alike

Um. No?

Pound Sterling
Euro
Swedish Kronor
Danish Kroner
Polish Zlotti
Russian Rouble
Hungarian Forint

Europe is not the Eurozone, either!

Jamesqf

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Re: Many middle-class Americans plan to work until they die
« Reply #23 on: October 25, 2013, 12:39:58 PM »
"Europe" is not a country. Germany is *vastly* different than the UK.

I'm well aware of that.  However, from my observation, it does seem quite difficult to attend a European (that is, just about any country within Europe) university unless you stick pretty close to the traditional academic path.  But I invite you to show that I'm wrong, with evidence rather than snark :-)

daverobev

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Re: Many middle-class Americans plan to work until they die
« Reply #24 on: October 25, 2013, 01:08:51 PM »
"Europe" is not a country. Germany is *vastly* different than the UK.

I'm well aware of that.  However, from my observation, it does seem quite difficult to attend a European (that is, just about any country within Europe) university unless you stick pretty close to the traditional academic path.  But I invite you to show that I'm wrong, with evidence rather than snark :-)

I don't even know what you mean, 'traditional academic path' - there are plenty of 'mature students' at British universities, if you are talking about the age at which people can attend. The point I was making was that in Germany, for example, 'the trades' and apprenticeships are much better supported than in the UK.

In the UK, there is the Open University which allows pretty much anyone to study for a degree in their own time, very inexpensively (it is available to non-residents but it is much more expensive in that case). People can go at their own pace, doing modules as they have time, working towards an eventual qualification.

HappyHoya

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Re: Many middle-class Americans plan to work until they die
« Reply #25 on: October 25, 2013, 01:17:56 PM »
Quote
Quote
True, though, that student loan stuff just can't go on. It's completely unfair to give hundreds of thousands of dollars of debt to children who don't really know what it means.

Agreed.  Except, of course that they are LEGAL ADULTS and it's THEIR OWN F'N RESPONSIBILITY to know what that means.

+1

College students are NOT children.  They are adults.  Treat them as such - the legal and banking systems do.

As someone who took on debt with my eyes wide open and takes responsibility for it, I agree with you in part. The problem is, while the legal and banking system treat students like adults, employers absolutely do not. I know a lot of young people who would love to handle responsibility at work, and are capable of managing others, but are stuck with internships or low-paying jobs because older workers are not retiring or feel the need to constantly degrade younger employees because of their own insecurities that they may be replaced. It almost doesn't matter how well you present yourself and how mature or capable you are, it's creating a culture where interning through your twenties is normal and if enough other people are doing it, good luck having an employer pay you when someone else will work for free. Complain about the under-30 set all you like, but we're not in a situation comparable to previous generations.

MrsPete

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Re: Many middle-class Americans plan to work until they die
« Reply #26 on: October 25, 2013, 01:40:48 PM »
The article says that middle class people can't afford to pay their bills AND save for retirement.  Well, if you accept that you must spend like the typical American, then that's true: Big house, new car every couple years, dinner out several times a week, vacations that require a plane flight.  But it doesn't have to be that way.  My husband and I do not particularly earn large salaries -- we're solidly middle class -- but we've done more than well saving for retirement.  How?  We've always lived under our means and have avoided debt.  Sure, a few people are genuinely in horrific situations beyond their control (especially people who weren't blessed with healthy bodies) and can't manage this, but the vast majority of us CAN.     

As to whether college students are children or adults, the answer is YES.  The 18-year olds are technically adults, but they are really still children just stepping into the world of adulthood.  They are not mature, experienced adults in the same way that older people are adults.  Some older college students are still children, while others have moved past that stage of life.   With rare exceptions, they really do still need some guidance in making financial decisions. 

dorkus619

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Re: Many middle-class Americans plan to work until they die
« Reply #27 on: October 25, 2013, 02:46:18 PM »
It's not my fault they didn't pay attention in high school math class or in science class to learn about compounding growth.  It's not my fault they didn't pay attention in high school civics or US history class about the boom and bust cycle, or the problems folks had who were in too much debt when the bust cycle began.  It's not my fault they didn't pay attention to history or current events every time the gas prices skyrocketed.  And it's not my fault they have BTSD syndrome and have to drive a big truck to compensate for their lack of manhood.
It's not their fault that public schools don't teach such common sense things or engage students effectively.

Honestly I didn't learn much about money in school at all - except how to balance a checkbook and that class was an elective, not manditory. I mean I guess I learned about interest and probably even the theory of compounding interest in that class and/or in math too. But really they pushed me more towards abstract algebra, trigonometry, and calculus. Not every day math people need to know! They glaze right over that!

I learned price comparison shopping and how to save in a bank account from my dad.
Everything else I learned on my own via blogs, forums, books, articles, etc. Self taught. A vast majority thanks to THIS blog and THIS forum might I add!


Edit: Quote tags got jumbled, fixed
Edit: Okay, really this time, I think... lol
« Last Edit: October 26, 2013, 08:55:49 AM by dorkus619 »

Mississippi Mudstache

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Re: Many middle-class Americans plan to work until they die
« Reply #28 on: October 25, 2013, 03:09:48 PM »
The discussion seems to have fallen off into a rabbit hole about student loans, but I will add my 2 cents:

College students are technically "adults" (though I couldn't buy a beer until after I finished my undergrad), but generally lack any sort of reference point for making financial decisions. I'll give you an example: I bought my first car (a 1991 Ford Explorer) as a senior in high school with money that I saved myself. As far as I was aware, the only thing I would need to budget for after that was gas. Tires, oil changes, insurance, taxes, depreciation, and not to mention repairs? That was completely out of my realm of thinking until they became a reality.

When you have very little experience managing money, therefore, the numbers seem abstract because you have no context. $126,000 seemed like a shitload of money when I signed the paperwork for my first house. I bought it on a 100% loan, because I couldn't fathom saving $25,000 for a 20% down payment at any point in the near future, and as far as I knew, rent was throwing money away. I had no clue what an amortization schedule looked like- how much money was lost to interest and PMI when taking out such a large loan with no equity. Even though I avoided the student loan trap that caught many of my peers, I stepped in the next snare by taking on whopping debt to buy a house a few scant months before the financial crisis. It wasn't due to a lack of intelligence, either - I blame it on my own lack of experience. You really cannot expect people to make sound financial decisions about such huge sums of money when they have probably not had more than $10,000 or $20,000 pass through their checking accounts in their entire lives - I certainly had not at the time that I signed on the dotted line.

dragoncar

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Re: Many middle-class Americans plan to work until they die
« Reply #29 on: October 25, 2013, 03:22:29 PM »
The discussion seems to have fallen off into a rabbit hole about student loans, but I will add my 2 cents:

College students are technically "adults" (though I couldn't buy a beer until after I finished my undergrad), but generally lack any sort of reference point for making financial decisions. I'll give you an example: I bought my first car (a 1991 Ford Explorer) as a senior in high school with money that I saved myself. As far as I was aware, the only thing I would need to budget for after that was gas. Tires, oil changes, insurance, taxes, depreciation, and not to mention repairs? That was completely out of my realm of thinking until they became a reality.

When you have very little experience managing money, therefore, the numbers seem abstract because you have no context. $126,000 seemed like a shitload of money when I signed the paperwork for my first house. I bought it on a 100% loan, because I couldn't fathom saving $25,000 for a 20% down payment at any point in the near future, and as far as I knew, rent was throwing money away. I had no clue what an amortization schedule looked like- how much money was lost to interest and PMI when taking out such a large loan with no equity. Even though I avoided the student loan trap that caught many of my peers, I stepped in the next snare by taking on whopping debt to buy a house a few scant months before the financial crisis. It wasn't due to a lack of intelligence, either - I blame it on my own lack of experience. You really cannot expect people to make sound financial decisions about such huge sums of money when they have probably not had more than $10,000 or $20,000 pass through their checking accounts in their entire lives - I certainly had not at the time that I signed on the dotted line.

We don't really stay on topic here

daverobev

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Re: Many middle-class Americans plan to work until they die
« Reply #30 on: October 25, 2013, 03:31:08 PM »
It's not my fault they didn't pay attention in high school math class or in science class to learn about compounding growth.  It's not my fault they didn't pay attention in high school civics or US history class about the boom and bust cycle, or the problems folks had who were in too much debt when the bust cycle began.  It's not my fault they didn't pay attention to history or current events every time the gas prices skyrocketed.  And it's not my fault they have BTSD syndrome and have to drive a big truck to compensate for their lack of manhood.
It's not their fault that public schools don't teach such common sense things or engage students effectively.

Honestly I didn't learn much about money in school at all - except how to balance a checkbook and that class was an elective, not manditory. I mean I guess I learned about interest and probably even the theory of compounding interest in that class and/or in math too. But really they pushed me more towards abstract algebra, trigonometry, and calculus. Not every day math people need to know! They glaze right over that!

I learned price comparison shopping and how to save in a bank account from my dad.
Everything else I learned on my own via blogs, forums, books, articles, etc. Self taught. A vast majority thanks to THIS blog and THIS forum might I add!


Edit: Quote tags got jumbled, fixed

Quote tags not fixed, that was not me! :)

Albert

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Re: Many middle-class Americans plan to work until they die
« Reply #31 on: October 26, 2013, 03:33:36 AM »
I studied Chemistry at uni, which was a huge mistake, and ended up doing database stuff for smaller companies - but I started out doing data entry as a temp (which led to a position at that company because I'm not a numpty). The thing is, half these people *are* numpties. That's not my fault, it's not their fault, it's not the system's fault *directly*. People are just doing what makes sense so they think. Unfortunately... it doesn't.

You must have not been very good at it or live in a place with zero chemical industry. Usually it's a very good career, at least myself and most of my study mate have done very well with it so far.

daverobev

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Re: Many middle-class Americans plan to work until they die
« Reply #32 on: October 26, 2013, 07:56:34 AM »
I studied Chemistry at uni, which was a huge mistake, and ended up doing database stuff for smaller companies - but I started out doing data entry as a temp (which led to a position at that company because I'm not a numpty). The thing is, half these people *are* numpties. That's not my fault, it's not their fault, it's not the system's fault *directly*. People are just doing what makes sense so they think. Unfortunately... it doesn't.

You must have not been very good at it or live in a place with zero chemical industry. Usually it's a very good career, at least myself and most of my study mate have done very well with it so far.

Ah, well. I am good at inorganic. My biggest problem was with practical work - I have since realised I just learn differently from 'most people' - I find it hard following recipies, things just take me longer the first time, and so on. So I dreaded practical, which made it worse and worse.

In the UK at least, only a small percentage of people who get Chemistry degrees go on to use their degree, though. It's a good degree, no doubt, but it wasn't for me.

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Re: Many middle-class Americans plan to work until they die
« Reply #33 on: October 26, 2013, 09:01:48 AM »
Quote tags not fixed, that was not me! :)

Okay I really think I got it right this time! sorry about that!

The discussion seems to have fallen off into a rabbit hole about student loans, but I will add my 2 cents:

College students are technically "adults" (though I couldn't buy a beer until after I finished my undergrad), but generally lack any sort of reference point for making financial decisions. I'll give you an example: I bought my first car (a 1991 Ford Explorer) as a senior in high school with money that I saved myself. As far as I was aware, the only thing I would need to budget for after that was gas. Tires, oil changes, insurance, taxes, depreciation, and not to mention repairs? That was completely out of my realm of thinking until they became a reality.

When you have very little experience managing money, therefore, the numbers seem abstract because you have no context. $126,000 seemed like a shitload of money when I signed the paperwork for my first house. I bought it on a 100% loan, because I couldn't fathom saving $25,000 for a 20% down payment at any point in the near future, and as far as I knew, rent was throwing money away. I had no clue what an amortization schedule looked like- how much money was lost to interest and PMI when taking out such a large loan with no equity. Even though I avoided the student loan trap that caught many of my peers, I stepped in the next snare by taking on whopping debt to buy a house a few scant months before the financial crisis. It wasn't due to a lack of intelligence, either - I blame it on my own lack of experience. You really cannot expect people to make sound financial decisions about such huge sums of money when they have probably not had more than $10,000 or $20,000 pass through their checking accounts in their entire lives - I certainly had not at the time that I signed on the dotted line.

basically EXACT situation as me. I avoided almost all student debt, but at age 20 (Aug 2007) I bought my first house for $136k @ 7.25% (no $ down) having NO concept of all that entailed. My thought was exactly "Why would I rent and throw $ away when I could have some equity in 6-10 years?" 6 years later and I'm -$55k on my investment. Half my payment right now is interest, and almost $180/month is PMI!

Looking back I feel it was a mistake, but boy have I learned a lot. I've definitely gained some experience points on that one.

Zamboni

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Re: Many middle-class Americans plan to work until they die
« Reply #34 on: October 26, 2013, 09:12:33 AM »
There were some voices of reason in the comments for that article.  One was noted earlier, and here is another one:

Quote
Sadly, I'll never be able to retire due to finances. I can do the math. It's too bad I did not do the math 20 years ago, in my 20s. I'm not even a dumb guy, generally, but ... I made a huge mistake.

I think many people are realizing in their 40's and 50's or even 60's that they made a mistake in not saving for retirement FIRST, then figuring out how to live on what was left. 

Most of the 20-something posters are here are miraculously not like that.  Hooray!  I do still see some questions about that though, the "should I start saving for retirement now?" questions.  Some even are letting the employer match go unused and then making excuses about how they need to pay their loans or there is some other better idea they have for their money.  And these are young folks who had found the MMM blog!  Ack!

I only had one class in school where finances were even mentioned and it was in my last year of elementary school.  We had class jobs for which we got paid in monopoly money, we paid rent on our desks, we had to balance our checkbooks, filled out 1040EZ forms and paid taxes on what we earned in our classroom economy, we could "invest" in real stocks with our monopoly money using the ticker prices, and there was a project where we had to plan a vacation using real gas prices, airfares, and hotels costs.  I had the highest paid job in the class (I was the bank manager), and I immediately realized that I could not really afford to fly somewhere.  But some of my classmates decided to fly somewhere fictional anyway and spent their entire income on their vacation.  Our teacher was too kind to evict them from their desks, but perhaps he should have?

After that, though, nothing in terms of education in this matter.  If I hadn't had that one specific teacher, then I would not have even known how to begin thinking about budgeting, investing, balance a checkbook or fill out tax forms (not that either of those things are difficult, but many Americans seem to struggle with these things.)  I think that, other than those who go into accounting, many American students just never see these topics in the classroom at all, period.  Please correct me if you had a particularly great financial education in the American school system.

oldtoyota

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Re: Many middle-class Americans plan to work until they die
« Reply #35 on: October 26, 2013, 10:11:55 AM »
From the comments:

"If you're on the younger side of 40 and you think you're going to retire at the same age as your parents you probably aren't being realistic or you're exceptional."

24, haven't finished school yet, live in a relatively expensive city, and plan to do it!

I think most of us here are exceptional then. =-)

oldtoyota

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Re: Many middle-class Americans plan to work until they die
« Reply #36 on: October 26, 2013, 10:13:15 AM »
I still don't understand how people think this is actually a possibility!  They get old, they don't learn, can't keep up, become liabilities, get hurt, etc. etc. - a thousand reasons why they might not be able to work until they die.  As if the thought of doing so wasn't depressing enough . . .

Exactly.  I can already see this happening in the not so distant future, and I'm only in my thirties!
Yeah, I read an interview in which a retirement expert said that those saying they will work into old age / until death don't understand that they will most likely be forced to stop working involuntarily (layoff, disability, etc.). She sees this all the time and calls it "cliff retirement" (as in: "fall off the...").

Yes. This! It's silly for anyone to think they can "choose" to keep working as long as they want.


El Gringo

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Re: Many middle-class Americans plan to work until they die
« Reply #37 on: October 26, 2013, 01:13:29 PM »
There were some voices of reason in the comments for that article.  One was noted earlier, and here is another one:

Quote
Sadly, I'll never be able to retire due to finances. I can do the math. It's too bad I did not do the math 20 years ago, in my 20s. I'm not even a dumb guy, generally, but ... I made a huge mistake.

I think many people are realizing in their 40's and 50's or even 60's that they made a mistake in not saving for retirement FIRST, then figuring out how to live on what was left. 

Most of the 20-something posters are here are miraculously not like that.  Hooray!  I do still see some questions about that though, the "should I start saving for retirement now?" questions.  Some even are letting the employer match go unused and then making excuses about how they need to pay their loans or there is some other better idea they have for their money.  And these are young folks who had found the MMM blog!  Ack!

I only had one class in school where finances were even mentioned and it was in my last year of elementary school.  We had class jobs for which we got paid in monopoly money, we paid rent on our desks, we had to balance our checkbooks, filled out 1040EZ forms and paid taxes on what we earned in our classroom economy, we could "invest" in real stocks with our monopoly money using the ticker prices, and there was a project where we had to plan a vacation using real gas prices, airfares, and hotels costs.  I had the highest paid job in the class (I was the bank manager), and I immediately realized that I could not really afford to fly somewhere.  But some of my classmates decided to fly somewhere fictional anyway and spent their entire income on their vacation.  Our teacher was too kind to evict them from their desks, but perhaps he should have?

After that, though, nothing in terms of education in this matter.  If I hadn't had that one specific teacher, then I would not have even known how to begin thinking about budgeting, investing, balance a checkbook or fill out tax forms (not that either of those things are difficult, but many Americans seem to struggle with these things.)  I think that, other than those who go into accounting, many American students just never see these topics in the classroom at all, period.  Please correct me if you had a particularly great financial education in the American school system.

You're teacher sounds incredible!

Jamesqf

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Re: Many middle-class Americans plan to work until they die
« Reply #38 on: October 27, 2013, 12:33:13 AM »
Yes. This! It's silly for anyone to think they can "choose" to keep working as long as they want.

I don't think so - and I have the example of my neighbor, who kept working as a mining engineer well into his 90s (and may still be doing some work, though he's had some health problems in the last couple of years). 

You do have to do some forward planning: as for instance, it's easier if you're a contractor rather than a W2 employee, because the employer doesn't get the same info about age &c.  Better still if you telecommute: one of my steady clients I haven't met face-to-face in maybe a decade.

footenote

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Re: Many middle-class Americans plan to work until they die
« Reply #39 on: October 27, 2013, 07:00:33 AM »
Yes. This! It's silly for anyone to think they can "choose" to keep working as long as they want.

I don't think so - and I have the example of my neighbor, who kept working as a mining engineer well into his 90s (and may still be doing some work, though he's had some health problems in the last couple of years). 

You do have to do some forward planning: as for instance, it's easier if you're a contractor rather than a W2 employee, because the employer doesn't get the same info about age &c.  Better still if you telecommute: one of my steady clients I haven't met face-to-face in maybe a decade.
Your exception simply "proves the rule." Very few people are engineers or lawyers. The vast majority of people labor in hands-on jobs and are very vulnerable to both layoff and disabling illness.

grantmeaname

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Re: Many middle-class Americans plan to work until they die
« Reply #40 on: October 27, 2013, 07:27:50 AM »
Is anyone else tiring of the "purchasing an annuity of future earnings worth hundreds of thousands of dollars for $15k is a terrible deal and banks are crushing the poor innocent young people" meme?

footenote

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Re: Many middle-class Americans plan to work until they die
« Reply #41 on: October 27, 2013, 07:34:42 AM »
Is anyone else tiring of the "purchasing an annuity of future earnings worth hundreds of thousands of dollars for $15k is a terrible deal and banks are crushing the poor innocent young people" meme?
Annuities are tricky but, with the right rate and the right provider, they can be a decent solution for certain situations.

On your second point, I'm weary of hearing generations X and Y complain that Social Security and other benefits "won't be there for us" because blah, blah, blah.

Truth is, Medicare will be difficult to fix, but Social Security need not be hard to repair. Worried? OK, quit pouring your energy into kvetching and actively advocate your favored solution.

cats

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Re: Many middle-class Americans plan to work until they die
« Reply #42 on: October 27, 2013, 10:24:57 AM »
Yes. This! It's silly for anyone to think they can "choose" to keep working as long as they want.

I don't think so - and I have the example of my neighbor, who kept working as a mining engineer well into his 90s (and may still be doing some work, though he's had some health problems in the last couple of years). 

You do have to do some forward planning: as for instance, it's easier if you're a contractor rather than a W2 employee, because the employer doesn't get the same info about age &c.  Better still if you telecommute: one of my steady clients I haven't met face-to-face in maybe a decade.

While it's great if you *can* work into your 90s, it's still not something I would count on being able to do.  The number of older people with dementia is pretty high, and it even strikes people who are active, healthy, mentally inquisitive and challenging themselves, etc.  Obviously you home that won't be you, but statistically speaking, it's wise to at least acknowledge that it's a possibility and have a contingency plan (like no having to work!)

Jamesqf

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Re: Many middle-class Americans plan to work until they die
« Reply #43 on: October 27, 2013, 10:21:41 PM »
Your exception simply "proves the rule." Very few people are engineers or lawyers. The vast majority of people labor in hands-on jobs and are very vulnerable to both layoff and disabling illness.

But many people can, or could with some forward planning, get themselves into positions where they are at least semi-independent, and so could continue to work without worrying about mandatory retirement &c.

As for the various forms of disability, that can strike anyone at any age.  Indeed, a work-related disability (fortunately temporary) is part of the reason I gave up the construction business at about age 30.

MrsPete

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Re: Many middle-class Americans plan to work until they die
« Reply #44 on: October 28, 2013, 11:04:37 AM »
As for the various forms of disability, that can strike anyone at any age.  Indeed, a work-related disability (fortunately temporary) is part of the reason I gave up the construction business at about age 30.
Yeah, anyone who works in a physically demanding job should have a plan to phase out the heavy manual work as he or she ages.  In fact, I can give two examples of people I actually know who've done this well / done this poorly:

Friend from church: 
- Started working as an electrician
- Started his own small business with his own work truck
- Grew his business, added trucks, hired and trained young men to work
- Now he sits home and supervises, going out only for the most complicated jobs

My uncle:
- Started working as a mechanic
- Started his own small business with his own work truck
- Worked, worked, worked, made tons of money . . . all by himself
- As he aged, he could not longer do as much, but he wouldn't take in apprentices -- ironically, he has three sons
- Worked 'til literally a week before he died, but saw his income dwindle because he couldn't do as much as he could when he was a younger man

HUGE difference. 



LalsConstant

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Re: Many middle-class Americans plan to work until they die
« Reply #45 on: October 29, 2013, 06:03:39 AM »
Ouch.  I remember when I used to believe this sentiment.

I do think the do nothing for thirty years retirement idea some people have is not possible for many but if you can clear your decks of debt learn not to spend everything you make and realize employment costs you hundreds of dollars a month you won't have to spend in retirement you finally start to realize it's plausible.

It's just that believing it is completely impossible to begin with is an emotional defense against confronting the harsh reality of your economic situation; the supposed impossibility of FI is an excuse among many not to change or try harder.

In all honesty though I don't think everyone can become FI but I think a lot more people than currently do certainly could.  Even if not everyone can I can tell you the debt free life is better.  I do think everyone could manage that, or close to it.

golden1

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Re: Many middle-class Americans plan to work until they die
« Reply #46 on: October 29, 2013, 01:13:47 PM »
I used to believe I would have to work forever.   Then I noticed that a fair few of the baby boomers I knew were inadvertently "forced" to retire around age 55-60 or so.  They would slow down at work a bit as they got older.  The manager would then lay them off and replace them with a college grad for half the salary.  Then this 55-60 year old would try to find a new job but no one wants to hire someone that age.  So they end up taking part time work or early retirement.   

Another thing that changed my mind on this is watching my parents and in-laws as they go through their 60's.  Keeping a work schedule becomes more difficult for health reasons.  Something always hurts.  I can see me wanting to slow down at that age.

One of the reasons I am looking into FI is not to retire super early - I am 40 and have kids so it is too late for that, but to be able to have more freedom to scale down my work schedule as I age.  My FI goal is 50-55, because by then I will have my mortgage paid off.  Then I can continue to work as long as I am able for some security cushion.

MrsPete

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Re: Many middle-class Americans plan to work until they die
« Reply #47 on: October 31, 2013, 07:50:50 AM »
It's just that believing it is completely impossible to begin with is an emotional defense against confronting the harsh reality of your economic situation; the supposed impossibility of FI is an excuse among many not to change or try harder.
Yes, this is the stumbling block for many people.  We see them on this board, and we see them on other money-related boards.  A typical story might begin with, "I owe this much and want to reach that goal . . . but don't tell me to get rid of my cable TV and smart phone, I don't like to cook, my kids deserve expensive activities, and I won't give up my yearly cruise.  Now, tell me how to reach my goal."  For that person, it is impossible.


footenote

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Re: Many middle-class Americans plan to work until they die
« Reply #48 on: October 31, 2013, 08:13:38 AM »
It's just that believing it is completely impossible to begin with is an emotional defense against confronting the harsh reality of your economic situation; the supposed impossibility of FI is an excuse among many not to change or try harder.
Yes, this is the stumbling block for many people.  We see them on this board, and we see them on other money-related boards.  A typical story might begin with, "I owe this much and want to reach that goal . . . but don't tell me to get rid of my cable TV and smart phone, I don't like to cook, my kids deserve expensive activities, and I won't give up my yearly cruise.  Now, tell me how to reach my goal."  For that person, it is impossible.
Agree. I have only been participating here less than one year (I'm one of the WaPo "class" of students), and I've already seen several cases of this.

For example, I wonder if we will ever hear from IDDD again. Several of us gently observed that her home/car/income/debt situation was structurally unsustainable. You can't recover from those situations without major restructuring. But she couldn't face serious restructuring. (At least so far - I'm still rooting for her!)

And another recent first-time-poster said she wants to FIRE by 30, but then declared 4 out of 5 of her planned out-of-town trips to be inviolable for purely emotional reasons. *sigh*

randymarsh

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Re: Many middle-class Americans plan to work until they die
« Reply #49 on: November 01, 2013, 08:16:39 AM »
Even if not everyone can I can tell you the debt free life is better.  I do think everyone could manage that, or close to it.

I agree. Even if FI isn't your goal, wouldn't life be so much less stressful? Whether you want the 30 year working career or just don't think it's possible to retire early, living debt free and saving has to be preferable to always living paycheck to paycheck.

Saving 10% is considered "good" these days, but it's not too difficult to get that up to 30%. That would make a huge difference in quality of life even if it's not enough to retire at 30.