Retirement Crisis Brewing...

[Kaspian]

What I thought was (overall) a fairly well-rounded article:

http://www.dailyfinance.com/2014/11/20/retirement-crisis-brewing-for-half-of-america/

The "shame and comedy" comes in the comments section, where every single person (except one) slams the story.  Including this tidbit:

easier to win the lottery then get 7.2%

Umm...  Obviously somebody who hasn't looked at investment returns over the past half-decade?  Why have I been so stupidly accepting 13-15% returns when I could have just won the lottery?  It's only 1 in 13,983,816.  I think I can do it, waddya say?

[MandalayVA]

I see that like many things finance-related the general consensus is "when in doubt, blame the gubmint/lib- or repubtards/Obummer/Faux News."

[Gone Fishing]

This is the only brewing I am worried about...

http://www.marketwatch.com/story/sierra-nevada-brewing-bridges-divide-between-east-coast-and-west-coast-2014-11-21?page=1

[Kaspian]

This is the only brewing I am worried about...

http://www.marketwatch.com/story/sierra-nevada-brewing-bridges-divide-between-east-coast-and-west-coast-2014-11-21?page=1

Bass player from my old band just opened one of those too!  ...And cripes, has he ever gone into debt to do it.  It'll probably take a few years to get the money back out of it.  Hope it works out for him.

http://ottawacitizen.com/life/food/whiprsnapr-brewing-aims-to-start-big-hopes-to-keep-rolling

[irishbear99]

I am in awe of the financial illiteracy shown in the comments, especially this one:

The boomers want to retire but they will drain SSI and the stock markets of all their money. So, contribute to the stock markets for the boomers to live off of and maybe someday you can be a parasite on your kids and grandkids too.

The fundamental lack of understanding on how the stock market works just floors me. Maybe it shouldn't, but it does.

[paddedhat]

I am in awe of the financial illiteracy shown in the comments, especially this one:

The boomers want to retire but they will drain SSI and the stock markets of all their money. So, contribute to the stock markets for the boomers to live off of and maybe someday you can be a parasite on your kids and grandkids too.

The fundamental lack of understanding on how the stock market works just floors me. Maybe it shouldn't, but it does.

I was also struck by the ignorance. My favorite is:

"Just when was the last time an average hard working American was able to get a 10% return? One would have to be in Government to get these returns and rates!"

Wow, this just shows how lost some folks are. Apparently the same government that printed trillions in QE cash, loans to bank at 0% and sells long term paper for a percent or two, is also a secret society. If you become a member of this secret society you then gain access to the ability to invest with returns that's lagging the market over the last few years. We have found the idiot tribe and heard from their leader.............

[frugledoc]

If you count the deferred tax as a return, in the UK you make an instant 25 - 40% profit on pension savings even if your investments stagnate in value.

[Malaysia41]

This abrupt left turn shook me from my terror reading the comment section:

Move to Arkansas it is cheaper to live there and you can hunt possum

Regarding the other comments - the lack of financial education in our public schools is the real crisis.
Well, that, and the possum hunting ban that apparently exists in 49 states outside of Arkansas.  Repeal the ban!

[BlueMR2]

easier to win the lottery then get 7.2%

Umm...  Obviously somebody who hasn't looked at investment returns over the past half-decade?  Why have I been so stupidly accepting 13-15% returns when I could have just won the lottery?

I kinda get where they're coming from.  I've seen 40-50% gains in a some areas over that time frame.  However, I lost 60+% in them prior to that.  ACTUAL returns from inception on most of my investments runs in the 3% range because I came in at the wrong time.  Long term I expect that to climb to something more reasonable, but if your a gen X'er that started saving early like me, you probably are looking at some less than thrilling historical numbers.

[wizlem]

This abrupt left turn shook me from my terror reading the comment section:

Move to Arkansas it is cheaper to live there and you can hunt possum

Regarding the other comments - the lack of financial education in our public schools is the real crisis.
Well, that, and the possum hunting ban that apparently exists in 49 states outside of Arkansas.  Repeal the ban!

I live in Iowa and apparently you can hunt all the opossum you want November-January.

[senecando]

In Wisconsin there's no bag limit on possum, skunk, weasel and porcupines!

Necessary shoutout to Dolly Freed's Possum Living.

[odput]

easier to win the lottery then get 7.2%

Umm...  Obviously somebody who hasn't looked at investment returns over the past half-decade?  Why have I been so stupidly accepting 13-15% returns when I could have just won the lottery?

I kinda get where they're coming from.  I've seen 40-50% gains in a some areas over that time frame.  However, I lost 60+% in them prior to that.  ACTUAL returns from inception on most of my investments runs in the 3% range because I came in at the wrong time.  Long term I expect that to climb to something more reasonable, but if your a gen X'er that started saving early like me, you probably are looking at some less than thrilling historical numbers.

This article doesn't get into the percentages, but it's worth a read for the raw numbers:  http://awealthofcommonsense.com/worlds-worst-market-timer/

I would be interested in the CAGR for this, and the effect of dollar cost averaging - especially in the years 2007-2009

[Scandium]

I was also struck by the ignorance. My favorite is:

"Just when was the last time an average hard working American was able to get a 10% return? One would have to be in Government to get these returns and rates!"

Wow, this just shows how lost some folks are. Apparently the same government that printed trillions in QE cash, loans to bank at 0% and sells long term paper for a percent or two, is also a secret society. If you become a member of this secret society you then gain access to the ability to invest with returns that's lagging the market over the last few years. We have found the idiot tribe and heard from their leader.............

Where could the average american get a 10% return? Oh I don't know; the stock market last year!?
Yes that was unusual, but funny how someone express incredulity at a 10% return not one year after everyone talked about the 30% annual return.

[Sid Hoffman]

So according to this website:

http://www.moneychimp.com/features/market_cagr.htm

It looks like even after inflation for the past 40 years excluding the banner year of 2014 the total returns of the market have been 5.8%/year.  Again, that's after inflation.  That's more than plenty to retire extremely comfortably if you are saving 10% or more of your income for 40 years.

[One Noisy Cat]

easier to win the lottery then get 7.2%

Umm...  Obviously somebody who hasn't looked at investment returns over the past half-decade?  Why have I been so stupidly accepting 13-15% returns when I could have just won the lottery?

I kinda get where they're coming from.  I've seen 40-50% gains in a some areas over that time frame.  However, I lost 60+% in them prior to that.  ACTUAL returns from inception on most of my investments runs in the 3% range because I came in at the wrong time.  Long term I expect that to climb to something more reasonable, but if your a gen X'er that started saving early like me, you probably are looking at some less than thrilling historical numbers.

This article doesn't get into the percentages, but it's worth a read for the raw numbers:  http://awealthofcommonsense.com/worlds-worst-market-timer/

I would be interested in the CAGR for this, and the effect of dollar cost averaging - especially in the years 2007-2009

In the late 1990s Peter Lynch, former manager of Fidelity Magellan fund, wrote an article on what happened if starting in 1966, one investor put $1000 into the market every year on the day it was at its lowest. A second investor invests $1000 every year but only on the day the market was at its peak. The end result?  Low guy had 11.7% annual return, high guy had 10.6% annual return.
      If by "where do you 10%", people mean "guaranteed 10%", the answer is nowhere. If you mean "around 10% over several decades", the U S stock market is a pretty good bet.

[KodeBlue]

"Financial literacy in our society is very low," Pahl notes. "There's very little effort made to educate our society, especially our young people, on how to manage money. Even a typical 30-year-old can't explain the difference between a Roth IRA and a traditional IRA."

Sad, but true.

[odput]

In the late 1990s Peter Lynch, former manager of Fidelity Magellan fund, wrote an article on what happened if starting in 1966, one investor put $1000 into the market every year on the day it was at its lowest. A second investor invests $1000 every year but only on the day the market was at its peak. The end result?  Low guy had 11.7% annual return, high guy had 10.6% annual return.

That's fucking amazing!

So according to this website:

http://www.moneychimp.com/features/market_cagr.htm

It looks like even after inflation for the past 40 years excluding the banner year of 2014 the total returns of the market have been 5.8%/year.  Again, that's after inflation.  That's more than plenty to retire extremely comfortably if you are saving 10% or more of your income for 40 years.

Very cool too...I think I figured out how I'm going to spend the next couple hours...

[Malaysia41]

In Wisconsin there's no bag limit on possum, skunk, weasel and porcupines!

Necessary shoutout to Dolly Freed's Possum Living.

As a joke, I posted a link to that book to my daughters and nieces in a closed FB forum we have for financial conversations.  I wrote, "your Christmas present: a preview."

They thought I was serious.  Maybe I need to lay off the YMOYL messaging.

[Kaspian]

"Financial literacy in our society is very low," Pahl notes. "There's very little effort made to educate our society, especially our young people, on how to manage money. Even a typical 30-year-old can't explain the difference between a Roth IRA and a traditional IRA."

Sad, but true.

But it seems nobody wants to learn.  If they did, they'd pick up books about it or sign up for courses and become financially literate instead of bitching.  ...You can lead a horse to water and all that.    I voluntarily told myself one day, "I'm a gonna figure 'dis shit out!"  Sadly, math isn't cool.  Not because it's difficult, but because everyone else says it's difficult, and there some weird social stigma attached with wanting to learn math and being good at it.