Comments on: Why You Don't Save For Retirement http://www.erica.biz/2009/why-you-dont-save-for-retirement/ Erica Douglass, "temporarily retired" after selling a successful business at age 26, writes thought-provoking blog entries challenging you to change your life and daring you to become more successful. Sun, 12 Feb 2012 01:40:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Erica Papdi http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-15464 Erica Papdi Mon, 02 Aug 2010 09:54:41 +0000 http://www.erica.biz/?p=808#comment-15464 I completely agree, the thought of saving and scrimping for a time when I am too old an possilby unfit to enjoy traveling has always sounds very depressing to me. I'm all for living life now and enjoying doing whatever it is you like to do until I drop. The thought of work, work, work for 45 years and then.....nothing to do? I'd prefer 3 month sabaticals here and there myself as well. I completely agree, the thought of saving and scrimping for a time when I am too old an possilby unfit to enjoy traveling has always sounds very depressing to me. I’m all for living life now and enjoying doing whatever it is you like to do until I drop. The thought of work, work, work for 45 years and then…..nothing to do? I’d prefer 3 month sabaticals here and there myself as well.

]]> By: Krystal Magee http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-4408 Krystal Magee Sun, 25 Apr 2010 02:04:06 +0000 http://www.erica.biz/?p=808#comment-4408 Renting is NOT better than buying!!! To rent costs more almost AlWAYS unless you want to rent an efficiency apartment for years.Let's see, a house with a mortgage of $800.00 a month would most likely be rented for $1,100 a month. The landlord isn't into renting out real estate for his own amusement, he's into it for profit. Another reason some people forgo investing sooo much into retirement is everyone hears the horror stories. I know more people who have invested for YEARS only to lose half, if not ALL of the money they have "invested" for retirement than people who have come out on top.In my opinion middle class families are better off paying off our mortgages, any debt, and then saving our money SAFELY.Not in risky stocks that rarely have an 8 percent return. That's being oh so generous and optimistic in my opinion.After reading a multitude of these posts I am pleased that other people find this article extremely unrealistic. Renting is NOT better than buying!!! To rent costs more almost AlWAYS unless you want to rent an efficiency apartment for years.Let’s see, a house with a mortgage of $800.00 a month would most likely be rented for $1,100 a month. The landlord isn’t into renting out real estate for his own amusement, he’s into it for profit. Another reason some people forgo investing sooo much into retirement is everyone hears the horror stories. I know more people who have invested for YEARS only to lose half, if not ALL of the money they have “invested” for retirement than people who have come out on top.In my opinion middle class families are better off paying off our mortgages, any debt, and then saving our money SAFELY.Not in risky stocks that rarely have an 8 percent return. That’s being oh so generous and optimistic in my opinion.After reading a multitude of these posts I am pleased that other people find this article extremely unrealistic.

]]> By: Rebecca Tervo http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-4226 Rebecca Tervo Thu, 22 Apr 2010 03:25:41 +0000 http://www.erica.biz/?p=808#comment-4226 Thanks for this post, Erica. I just started reading your stuff lately, and as an avid personal finance book junkie, I felt this was a good post to respond to. Without thinking about or redoing a bunch of math...I'd like to respond by considering the changes in the economy lately. I'm especially concerned about where we are all headed if we continue to invest our money in the stock market and retirement plans that only invest in mutual funds. I know it's a lot of "what if's", but what-if the dollar becomes worth ZERO? My husband and I are currently looking at taking money out of our 401(k) and investing into more rental real estate, gold, business ventures or other things where the value won't be zero when the dollar is worthless. Yes, I am considering the tax consequences. I'm wondering if it's better to pay a penalty for early withdrawal, or to lose the whole thing entirely? "The New Rules of Money" by Robert Kiyosaki is very enlightening book on the topic of where our economy may be headed. I highly recommend it. Thanks for this post, Erica. I just started reading your stuff lately, and as an avid personal finance book junkie, I felt this was a good post to respond to.

Without thinking about or redoing a bunch of math…I’d like to respond by considering the changes in the economy lately.

I’m especially concerned about where we are all headed if we continue to invest our money in the stock market and retirement plans that only invest in mutual funds. I know it’s a lot of “what if’s”, but what-if the dollar becomes worth ZERO?

My husband and I are currently looking at taking money out of our 401(k) and investing into more rental real estate, gold, business ventures or other things where the value won’t be zero when the dollar is worthless.

Yes, I am considering the tax consequences. I’m wondering if it’s better to pay a penalty for early withdrawal, or to lose the whole thing entirely?

“The New Rules of Money” by Robert Kiyosaki is very enlightening book on the topic of where our economy may be headed. I highly recommend it.

]]> By: $$ http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-3091 $$ Fri, 12 Mar 2010 02:43:39 +0000 http://www.erica.biz/?p=808#comment-3091 As a lot of people have pointed out in this article the coffee point isn't going to cut it for retirement. Still, I have analyzed exactly how much not spending money on coffee and saving for retirement will net you taking into account inflation (also including the cost of the coffee itself going up) and a decrease in risk tolerance for investments as we get older. This will provide a much more accurate number than the 228k mentioned about which is beyond realistic. http://livinginvol.com/?p=6 As a lot of people have pointed out in this article the coffee point isn’t going to cut it for retirement. Still, I have analyzed exactly how much not spending money on coffee and saving for retirement will net you taking into account inflation (also including the cost of the coffee itself going up) and a decrease in risk tolerance for investments as we get older. This will provide a much more accurate number than the 228k mentioned about which is beyond realistic.

http://livinginvol.com/?p=6

]]> By: Chris http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-1667 Chris Mon, 09 Nov 2009 18:38:22 +0000 http://www.erica.biz/?p=808#comment-1667 Where, on this earth, can an average person be able to make 8% annually on their savings in a low enough risk environment to guarantee that return for 30 years?? Industry propaganda, pure and simple. It doesn't exist. This is why most retirement advice is total bullshit, and is just used to sell financial products. Perhaps the rare astute investor acan do it, but as advice for society in general, it doesnt wash. Most people will live on rents, or social security, when they retire. Nothing more. Where, on this earth, can an average person be able to make 8% annually on their savings in a low enough risk environment to guarantee that return for 30 years?? Industry propaganda, pure and simple. It doesn’t exist. This is why most retirement advice is total bullshit, and is just used to sell financial products.

Perhaps the rare astute investor acan do it, but as advice for society in general, it doesnt wash. Most people will live on rents, or social security, when they retire. Nothing more.

]]> By: mjukr http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-1666 mjukr Thu, 02 Apr 2009 18:43:16 +0000 http://www.erica.biz/?p=808#comment-1666 I think Douglas and Alison make good points. Reminds me of the Robert Heinlein quote: "$100 placed at 7 percent interest compounded quarterly for 200 years will increase to more than $100,000,000 - by which time it will be worth nothing." I think Douglas and Alison make good points. Reminds me of the Robert Heinlein quote: “$100 placed at 7 percent interest compounded quarterly for 200 years will increase to more than $100,000,000 – by which time it will be worth nothing.”

]]> By: Alison Whittington http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-1665 Alison Whittington Wed, 01 Apr 2009 12:51:38 +0000 http://www.erica.biz/?p=808#comment-1665 While I completely agree that it's amazing that $5 a day can become so much money over time, I also think it is crucial to enjoy life in the moment, and if, for some people, that means a deluxe coffee, while for other people, it means a video game or a weekly movie instead of Netflix, then I don't think those are frivolous indulgences. The key is to actually enjoy those little indulgences, and be aware that you are enjoying them. To live in the moment. (While it's certainly true that many people could be forced to retire much sooner than expected, it's also true that any one of us could die much sooner than expected.) I am not trying to put down saving for retirement in any way, and I don't think "living in the moment" means a complete lack of planning for the future. It means not living for the future at the expense of now (pun only slightly intended). Because time is something you can never get back. While I completely agree that it’s amazing that $5 a day can become so much money over time, I also think it is crucial to enjoy life in the moment, and if, for some people, that means a deluxe coffee, while for other people, it means a video game or a weekly movie instead of Netflix, then I don’t think those are frivolous indulgences. The key is to actually enjoy those little indulgences, and be aware that you are enjoying them. To live in the moment. (While it’s certainly true that many people could be forced to retire much sooner than expected, it’s also true that any one of us could die much sooner than expected.)

I am not trying to put down saving for retirement in any way, and I don’t think “living in the moment” means a complete lack of planning for the future. It means not living for the future at the expense of now (pun only slightly intended). Because time is something you can never get back.

]]> By: Douglas Webb http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-1664 Douglas Webb Wed, 01 Apr 2009 12:41:39 +0000 http://www.erica.biz/?p=808#comment-1664 Erica, in your latte example you're comparing the present value of the cash flow (a tasty latte) against the future value of the cash flow ($228587.59 with daily compounding.) That's a false comparison though; you're not accounting for inflation and the lower value of those dollars 30 years from now. Assuming 5% annual inflation (probably too low) in 30 years your $228587.59 is going to be worth the same as $52890.01 is today: not nearly enough for most people to retire on for very long. So, is it worth giving up nearly 11 thousand tasty lattes just to go broke soon after retiring? Not really. Every little bit helps, of course, but like everything else to do with money, it takes a serious commitment to get serious results. At $22/day, after 30 years at 8% you'll have just over a million dollars in the bank, worth about the same as $224K today. That will go a lot further than the $53K of value you'll have saved at $5/day. If nothing else, it'll buy you a very nice retirement home in most of the country, which you'll need if you've been renting all of your life... Doug. Erica, in your latte example you’re comparing the present value of the cash flow (a tasty latte) against the future value of the cash flow ($228587.59 with daily compounding.) That’s a false comparison though; you’re not accounting for inflation and the lower value of those dollars 30 years from now.

Assuming 5% annual inflation (probably too low) in 30 years your $228587.59 is going to be worth the same as $52890.01 is today: not nearly enough for most people to retire on for very long. So, is it worth giving up nearly 11 thousand tasty lattes just to go broke soon after retiring? Not really.

Every little bit helps, of course, but like everything else to do with money, it takes a serious commitment to get serious results. At $22/day, after 30 years at 8% you’ll have just over a million dollars in the bank, worth about the same as $224K today. That will go a lot further than the $53K of value you’ll have saved at $5/day. If nothing else, it’ll buy you a very nice retirement home in most of the country, which you’ll need if you’ve been renting all of your life…

Doug.

]]> By: Ashley Doran http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-1663 Ashley Doran Wed, 01 Apr 2009 00:26:47 +0000 http://www.erica.biz/?p=808#comment-1663 Erica, Great post (and the first one I've read on your blog -which I've dutifully added to my Google Reader). Reminds me of what my CPA said years ago: "If you actually use the square footage of your home - really use it - and plan on staying put for 5+years, it's worth the plunge." Lots to think about though. Don't mind telling you I have "Daughter Guilt" over a Christmas gift from my parents - the never ending Starbucks gift card. I wonder if they would be willing to finance my retirement as opposed to my caffeine addiction. Erica,
Great post (and the first one I’ve read on your blog -which I’ve dutifully added to my Google Reader).

Reminds me of what my CPA said years ago: “If you actually use the square footage of your home – really use it – and plan on staying put for 5+years, it’s worth the plunge.”

Lots to think about though. Don’t mind telling you I have “Daughter Guilt” over a Christmas gift from my parents – the never ending Starbucks gift card. I wonder if they would be willing to finance my retirement as opposed to my caffeine addiction.

]]> By: Tim Jahn http://www.erica.biz/2009/why-you-dont-save-for-retirement/#comment-1662 Tim Jahn Tue, 31 Mar 2009 20:49:26 +0000 http://www.erica.biz/?p=808#comment-1662 To me, the idea of retirement implies that you've been wasting 40 years doing something that you can't wait to "retire" from. Retirement is the light at the end of the tunnel. If that's the case, you should probably find a different tunnel. Maybe one with more light. To me, the idea of retirement implies that you’ve been wasting 40 years doing something that you can’t wait to “retire” from. Retirement is the light at the end of the tunnel.

If that’s the case, you should probably find a different tunnel. Maybe one with more light.

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