May 26, 2008

HP'ers who are retired or over the age of 65 - what advice can you offer your fellow HP'ers?


What did you really do right in your life?

What could you have done better?

Were you prepared for retirement?

What was your biggest mistake?

What worries you the most?

What gives you the most hope?

I think about 2% of HP'ers are retired or over 65, but I'd like to hear from them. Feel free to chime in on these even if you aren't 65/retired.


75 comments:

Anonymous said...

My Mom is an over 65 HP'er but she does not bother with this "new fangled" internet "BS" but she has passed on the following me to post:

Her over arching comment: "If it's too good to be true, then it is"

After writing all this down basically the bottom line up front is homes, family and community are all intertwined, but if you isolate/disrupt this interaction to ruin families and communities. That is what the bubble created by banks for a profit has done by making housing a get rich quick investment scheme and not a home for a family who then collectively form a community.

1-Houses are homes first and an investment second. The factors that make a house a good or bad home are what make it a good or bad investment. Keeping up and caring for a home is all you need to do to maintain it as an investment.

2-Big life decisions like purchasing a home and getting married have become too flippantly made by the modern generation, and this housing downturn is just the dose of medicine they need to make people realize how important these decisions really are (she stresses that is includes banks). She stated it another way, which I do not think she realized, but which frames the issue better:

"I (She) spent thirty years working hard to keep my home, pay off the mortgage, and trying to keep up the maintenance & remembers the pain that was getting a mortgage and the closing and I just cannot fathom all this "flipping" cr@p"

3-Her taxes and upkeep are virtually the same in dollar terms as they were when she was also paying on the mortgage. I.e. the cost of taxes and upkeep now equal taxes, upkeep and principal & interest.

4-She is grateful to have paid off her home, have a decent social security check plus a pension check, and does not "get involved" in credit cards.

5-She cannot fathom people responding to flyers and mailers to get a loan of any fashion. She does not trust just anyone, and only trusts her bank. She has some misgiving about trusting it now because it was bought out by an out of town/state bank but because the people have stayed the same she feels she can trust them. I.e. she has identified the issue that modern banking has become uncoupled from communities, a key ingredient to all this fast and loose lending that has destroyed and not enhanced communities.

6-She does not understand nor would she ever get involved with these "reverse mortgages" instead she wants us to have the home we grew up in, fix it up and have one of us move in or sell it and split the proceeds. Collectively, my siblings do not want to profit from her efforts and plan on purchasing the home when she can no longer live independently, give her the money to enhance her final days of retirement. We will fix it up, sell it and any excess profit will also go to her retirement.

consultant said...

Biggest mistake?

All the people who voted for Bush-twice (not me)!

All the people who want a "get something for nothing" lifestyle. Which, BTW, is the value system that seems to drive all of our leaders, in every sector.

A nation can't survive on a "Pick 5", Lotto ticket mentality.

We are so screwed.

Anonymous said...

I turned 65 in March. We rented the same 2 bedroom condo in the heart of Silicon Valley for 32 years. I stayed at the same job for 35 years and never grossed over 48K. We put two children through college and saved over 1.5 million dollars. We now live in a paid for 3/2 on five acres on southern Oregon.Life is good.

Big Cheese said...

Keith,

Good advice. But please take the caveat that the next 30 years will be very damn different from the previous 30 for many reasons:

-Peak Oil
-Peak Population

But the cycles of life and lessons about relationships & values should be applicable.

BTW, aren't you over 65? For some reason I think you could well be.

-BC

Anonymous said...

I spent half of my fortune on wine, women and song. The other half....I wasted.

Mark in San Diego said...

I retired at 56, and am now 58. My advice isn't anything new - we lived below our means, put the max in our 401/403, put some money in our Fidelity Accounts in blue chip DIVIDEND stocks, and reinvested the dividends in stocks like Chevron, Dow Chemical, Merck (although sold before Vioxx mess), and a lot of small regional boring companies that just fly under the radar, but pay dividends.

When our friends bought new cars every year or two, we drove an old Nissan, or Honda or took BART (BAy ARea Rapid Transit to work). . .when we did "splurge" it was a Red Corvette 6 speed, I bought it one year old off a consignment lot and saved a bundle - still have it and has not turned 100K yet.

We did have two rental condos - kept my orginal one when I got married, and bought another one at a bank sale for the two of us to live in. . .I married late, so we didn't have children (THAT is a big savings, but not a choice for all).

We are now vacationing up in Anchorage this moring on the way to Denali, then Fairbanks. .. we are staying at a nice Days Inn (note a budget hotel), although we could stay at the Hilton. . .ate at a great brew-pub last night - Glacier Brew (highly recommend) although we could have afforded a big steak dinner at a fancy hotel restaurant. . .

We do splurge on plan-ahead business class on our Euro trips, but we save a bit elsewhere. . .

My "worry" is that Social Security will go bust, but we can live without it. . .we now rent in SD - A renters paradise, and kept the money from the sale of our last house in the banks at 4% interest, which on 600K pays our rent! We MAY buy if the market drops to where it is smart to own again. . .but coming up on 60, there is less incentive to buy. . .we love the ability to move anywhere we please at the drop of a hat - Palm Springs? Miami? Savanah? . . .the world is ours.

Anonymous said...

We are 64 years old, and pretty much did everything "right": put aside money, paid off our house early, have no debt, and have a portion of our money in foreign currencies. However, we still have some money in dollars, and depend on part of our income from a federal pension and social security. It is obvious to me that the tanking of the dollar is purposeful and fits in with the plan to eviscerate the middle class in this country and bring us down to the level of a third-world nation. So, although we have a comfortable life, live modestly and stay out of debt, I am concerned for the future of everyone in this country who counts himself/herself among the middle/working classes. We're pretty much screwed.

Anonymous said...

I'm 65 and still working. My wife is retired.

My wife and I both worked and sent each other through college to get masters degrees in our respective professions. By doing this we learned to live on one income and invest the other, first in higher education and later in various retirement accounts, cash, and in accelerated payment for our houses.

A near perfect FICO gives us huge savings on insurance, about 1/2 what our neighbors pay, and on loans.

We made mistakes but the experienced gained seems to have rewarded us later.

Anonymous said...

I am 69 years old. Retired in 1999.

The main item to do is to start a serious saving program 401, or retirement program with maxed out options about 15-20-10 years ahead.

Next step is to get out of debt(see Dave on Fox).

We lived in a crappy mobile home on a sand lot that I owned, debt free. We also, saved every loose penny we could.

I had a Govt job. We had good Medical ins.
Working for the Govt sucks. But, they have the best medical/retirement. So I just grinned and bore it...

Late '90s we picked a retirement location in Phoenix close to good medical facilities.

You must pick a low cost area that will be good to grow old in. Forget the beach, Alaska, Hawaii, anywhere in cold country. Don't waste your money on RVing, unless you have a lot to waste.

Learn to take care of your body. Easy on the booze, smokes, drugs, donuts, sugar, and easy on the exercise. Only fools beat hell out of their bodies thinking they will live longer.

Eat only natural fats. Low fat diets will kill you (makes doctors rich).
Understand your body. No excuse with the internet.

Buy a new home only if it is wheel chair compatible, well insulated, and a energy efficient heating system. No tubs just showers with safety bars, to wash your body.

Remember you will get old. You could wind up in a wheel chair.

Reverse the mortgage when you can after age 62. You and your wife have a home with no payment until the end. To hell with the kids... Look after yourselves.

Regrets: Should started retirement fund at 20 years ahead. I should have given up my toys sooner. I should have taken better care of my body.

Things I have done right: Had enough money, barely.
Married a good smart woman.

Learned to cook. My wife got sick had to cook and care for her for several years.

Biggest mistake: Didn't really make one. Carefully thought things through with my wife... Listen to your wife. Women see things that men cannot.

Worries: We have three morons running for president. Sad, wish Ron Paul had a chance.

Hope? Well, life is life. It is a wonderful gift. God is all there is. Rest is illusion created by man's ignorance and greed. Abet, very realistic.

Good Luck to you

Anonymous said...

I'm retired after working 37 years in IT. My one piece of advice is always try to live BELOW your salary. Not only for saving money for retirement or a rainy day, but also life is much less stressful if you have a few dollars left over each payday to do something you enjoy however small and simple it may be.

Anonymous said...

When you get married, use 100% of your wife's income to pay off student loans and other debts, and when all debts are paid off, use that income stream to build up an investment portfolio. If you NEVER allow yourself to get used to living on two incomes, you'll never come up short when faced with a job loss, a pay cut (or cut in working hours), an unexpected pregnancy, need to help out aging parents, etc.

Anonymous said...

As a general rule I don't listen to anyone on CNBC unless they're at least 70.

Anonymous said...

I am not over 65 but my parents retired early. They retired in their mid 50's. Here is what they did right:

1. They saved their money. They lived off one paycheck and my mom's paycheck saved.
2. They didn't get greedy by buying stuff they didn't need (i.e. big screen tv's, sports cars, luxury vacations, etc...). But they didn't live like they were really poor (i.e. denying themselves decent stuff in life).
3. They invested their money into three apartment buildings and one motel. The three apartment buildings are paid off and the motel generates a lot of cash flow.

The bottom line as I learned from my folks who are immigrants from Korea is that get a good education, save your money and invest it in investments that you totally understand and know how to manage so you don't get taken to the cleaners.

desmo said...

The only guy who reads HP over 65 died yesterday.

Anonymous said...

I am 48, my Dad is 74.
dad is retired since 60 - he worked for Texaco 33 years - great retirement plan (full medical and 4000$/month 4 ever)
This retirement plan is not available anymore. And to be honest, my Dad put everything possible into Texaco stock during his working life - he lived below his means. HE HAS A GREAT LIFE NOW - hunting , fishing trips all the time.
He worked (on loan) with Aramco in 1990's - he says wells were shut in if they produced 5% water. Now most producing wells are 50% water - we are near a decline in production from Saudi -

Anonymous said...

I retired at 55. If you really want to retire at a reasonable age then get a secure job with a defined benefit pension plan and stick with it. Don't be too concerned about the pay, for example, a postal service job would be fine. It's also very important to spend a lot less than you earn and to invest prudently (with a large cash position).

I think the key to financial independence is to have modest tastes. Don't expect to live large in retirement and keep in mind that the post-WWII cost of living has increased annually about 5%. A 5% annual cost increase means that money loses half of its purchasing power about every 14 years. So about 28 years from now you will need $400 to buy what you can get for $100 today.

Stuck in So Pa said...

1.What did you really do right in your life?

Never had kids by choice, kinda lucked out on the rest.

2.What could you have done better?

Spent less time on business, more on loved ones.

3.Were you prepared for retirement?

Money,Yes. How to use he free time to my advantage, No.

4.What was your biggest mistake?

All the possessions, now useless, accumulated over many years

5.What worries you the most?

The direction this country is headed, and how the young people of today are going to make it.

6.What gives you the most hope?

What hope?

Anonymous said...

Apparently, they STILL haven't figured out how to use computers...

Anonymous said...

I'm not retired and far from it, but I can pass te following piece of wisdom.

HP Quote Of The Day:

Poor people have been voting for Democrats for the past 50 years...and they're still poor.
Sir Charles Barkley

keith said...

Mark - good advice as always, nicely done, and I like the travel slant. How the bugs in Alaska? I think I was at that brewpub once if it's the one with the great rooftop patio? Good fresh beer and air..

Only advice I'll add to yours is on how to make your money go far when travelling HP'ers: Just get off the beaten tourist path.

Here in Bulgaria for instance, in the city of Varna, which is beautiful (in many ways if you get my drift) an amazing dinner for two at a nice restaurant with a nice bottle of wine will set you back $30. Down the road in Golden Sands where all the tourists go, it'll be $100. And in London? $300.

On hotels - one word - PRICELINE (and bid). Stay in 5 star hotels for the price of a day's inn. All over the world.

Or better yet, rent a vacation condo versus a hotel - you get a much nicer and larger place and you can cook meals from time to time. VRBO, holidaylettings.com, ownersdirect.com and homelidays are my favorites over here. And you can negotiate with the desperate owners too - it's fun. So many fools 'bought' second homes they don't use these past few years, they're desperate for renters.

And above all - DON'T BUY A DAMN HOME, or a time-share, or a boat - rent 'em for pennies on the dollar. Go ahead, live in a home you couldn't afford to 'buy'. Rent a nice boat for a week. Stay in someone else's time share and let them take it in the shorts for being stupid.

Be smarter than the crowd, avoid 'ownership', and your money goes sooooo much farther.

Anonymous said...

If I was 65 I want to be just like Lawrence Yun. An old crusty liar.

Dogged American said...

Will Rogers, commentator from the 1930's, had a great quote I'd like to share. It concerned the follies of the Roaring '20's but is still relevant today. Here it is (slightly paraphrased):

"There were a lot of people in the world spending money they didn't have; buying stuff they didn't need; only to impress people they don't even like!"

shtove said...

Good thread. Nothing to add.

Anonymous said...

OT, These two teens have become one of the biggest recyclers in the country. They sell your donated cellphones to recyclers and then buy calling cards for American troops to call home. AT&T has a bunch of drop-off sites around the country, or you can ship your old phones to them. If you're like me, you have a zillion old cellphones at home. Thanks.

www.cellphonesforsoldiers.com

john r said...

What could I have done better and regret not doing? Well, lets see:
got a good education
had a great IT job and retired well
traveled throughout the US and abroad
OK - should have taked advantage of getting more p.u.s.s.y. while I was young

Anonymous said...

How naive and silly can you be Keith? There is no way in hell you can have an apples to apples comparision with today's 65 year olds and guys like me who are 33.

I keep hearing "I had a good pension and medical." Well most of those are history. "We lived below our means." How 'bout a cost of living reality check 1958 vs 2008??? "Our wives never worked." see today's cost of living.

Bottom line: those of you able to retire today benefitted from an entirely different world, and how dare you give us advice that worked for you. DIFFERENT CIRCUMSTANCES!

InvestorinPA said...

Folks, this is the best advice overall I've seen in the past 2.5 years of reading Housing Panic. Thank you to all of the older contributors. Your collective wisdom, fears, and sucesses make it all the more worthwhile to impart into our brains. This is coming from a 31 year old guy who once thought he knew it all.

venetiancafe said...

Savanah is spelled Savannah. If you can't spell it, you should stay in San Diego. Enough carpetbaggers here already.

Anonymous said...

my Dad has been collecting an army pension for 35 years! i thinks he's finally got his money's worth from Uncle Sam for the crap one has to endure for 20 years in the army.

Macaca

Mark in San Diego said...

Alaska - no bugs yet - there is about a three week windown - after the frosts and before the bugs. . .maybe May 15- June 10 . . .locals love this time of year because the bugs haven't arrived. . .still kind of cool - 38 at night and 55-60 during the day, but 22 hours of sun makes it feel warmer. . .

Interesting how a few other guys mentioned the fact you don't need to earn a fortune (I didn't) but it is what you keep, not what you earn. . .also - I had a co-worker who started his family when he was 50. . . .married a younger woman, had two kids, because he wanted to be a "soldier of fortune" while he was young - he saved up a lot of money, now he can have the kid and a good life too. . .many ways to live life. . .

Mark in San Diego said...

Biggest Mistake - not doing a "year abroad" when I had the chance in college. If I had known then what I know now, I would have worked for at least 5 years abroad. . .Keith has the right idea - my nephew who did this is now living in Amsterdam and working for Citibank - hey, if he gets the boot, he just finds another bank.

bitterrenter said...

And after a majority of the middle class voted republican for the last 30 years, they're joining the poor.

Mammoth said...

Stuck in South PA's comments:
"2.What could you have done better?

Spent less time on business, more on loved ones.

3.Were you prepared for retirement?

Money,Yes. How to use he free time to my advantage, No."
-------------------------
are thought-provoking.

Though I am over a dozen years short of turning 65, let me state that re: (2) one needs to always keep in mind that work is a means to an end; i.e. one should not dedicate their life to a job, at the expense of family & personal life.

And re: (3), one needs to cultivate numerous interests outside of the working sphere.

I recall my father's comment a few years after he retired: I am so busy with everything I'm involved in, that I can not understand how I ever had time for a job.

Man I wish that I did not have to go to work tomorrow. I have a lot to do out in the garden!

Oh well, at least it will be a 4-day work week.

-Mammoth

Anonymous said...

I look at people that have done NOTHING with thier lives except work, save, work, save, work, save, ....

and it makes me sad for them. Pathetic way to live, focusing your entire live on saving until you hit 65 so then you can sit in front of a TV until you die.

It is called being a wage slave.

I gambled and speculated every chance I could, made sure I always had a hot leased cars, expense clothes, and ate at the best restaurants.

I always treated ALL women like crap especially my wives.

I do drugs in moderation and rotate between wine, pot, and cocaine.

If I am short on money then I just pull some scam and take money from HP readers to fill up my tank again.

I lived move in each year of my live then most of your readers do in a life time.

When I retired.... well I never plan on being retired...why we only get 1 life.

Retirement is as bad as being a wage slave your entire life.

SD Renter said...

Save and pay cash. Delay gratification.

Anonymous said...

It is called being a wage slave.

I gambled and speculated every chance I could, made sure I always had a hot leased cars, expense clothes, and ate at the best restaurants.

I always treated ALL women like crap especially my wives.

I do drugs in moderation and rotate between wine, pot, and cocaine.

If I am short on money then I just pull some scam and take money from HP readers to fill up my tank again.

I lived move in each year of my live then most of your readers do in a life time.

When I retired.... well I never plan on being retired...why we only get 1 life.

Retirement is as bad as being a wage slave your entire life.


Hmmm, interesting philosophy you have there. Have you ever thought about a career in politics?

But seriously, maybe the difference between you and the average wage slave is that they have a family and you don't?

It's a little hard to follow your lifestyle choices and avoid raising a dysfunctional and retarded family in the process. Some wage slaves actually gain a lot of enjoyment from their family lives without all of the pot, cocaine, prostitutes and leased Ferraris and your selfish state of mind mentality.

Anonymous said...

First off, you know how much money you need to retire?

Answer: 50% more than you have!

I retired at age 38 from a career on Wall Street, now 51. The only real advice I have for someone is to control spending at a level that makes sense given your net worth.

Put another way, the joke has truth to it: no matter what your level of income/net worth, controlling expenses is the key.

Anonymous said...

Anon May 27, 2008 2:10 AM:

"We lived below our means." How 'bout a cost of living reality check 1958 vs 2008??? "Our wives never worked." see today's cost of living."

Like most people today, you simply do not know how to:

1) Do without
2) Cut costs
3) Live beneath your means.

Is it 'fun', enjoyable, easy? No. But it can be done. Spend less, live in a cheaper neighborhood, buy used cars, no debt no cc's no student loans no mortgage no car note and save half your income.

Anonymous said...

My advice is to live life to the fullest and enjoy your youth and energy .

Lost Cause said...

Please allow me re-phrase the question:

Now that you have purchased your freedom, what advice can you give to those climbing up the burning rope behind you?

Anonymous said...

"All the people who want a "get something for nothing" lifestyle. Which, BTW, is the value system that seems to drive all of our leaders, in every sector.

A nation can't survive on a "Pick 5", Lotto ticket mentality."

Amen to that. Soon, we will have to dig out and put on our "Big Boy Pants" and start building things of real value to our society again - like a decent rail system, big commercial ships, updated water and sewer systems for an aging infrastructure, power plants, etc. I'll be happy to see engineers and industrial activity come back again - if I live that long - it will be a necessity. Get out your Big Boy Pants again America. Sweating and getting dirty at work is not a sin and should not be frowned upon or looked down upon. Put all these smoothies selling toxic debt traps to the unwashed masses into a real job. Some of them might actually feel better about themselves after the adjustment.

Grandpa Walton

Anonymous said...

Mama said alligators are ornery because they have so many teeth and no toothbrush

Anonymous said...

"Reverse the mortgage when you can after age 62. You and your wife have a home with no payment until the end. To hell with the kids... Look after yourselves."

Ha! Now that's what I call paying it forward...shirtsleeves to shirtsleeves in three generations. I take it your old man was a greedy pig, too?

AmazingRuss said...

"Bottom line: those of you able to retire today benefitted from an entirely different world, and how dare you give us advice that worked for you. DIFFERENT CIRCUMSTANCES!"

EVERYTHING hasn't changed. Most of that advice works no matter what the circumstance...and remember we are in a rather crappy economic time just now. Things will most likely get better.

Thanks for the observations, oh Grizzled Elders.

Anonymous said...

Great post, really enjoyed ready the comments. Good job Keith!

Good Time Charlie

tglobal1 said...

What I did well - married a good woman early in life, still married after 41 years.

Biggest mistake - not paying attention to the social re-engineering of schools and the negative impact on my kids

I retired at 50 with only $5,000 in savings.

Ready for retirement - retirement today is not the same as it was for my parents (WWII) generation. Retirement today simply means working at a craft or hobby that is emotionally satisfying.

Biggest worry - the continued decline of leadership in both political parties

Carioca Canuck said...

I am 48 and plan to pack it in when I am 55. So I am going to reply anyways.....

Biggest mistake/regret ?

Not saving enough money in my early years (20-40).

A HUGE MISTAKE !!!

Wifey and I have saved $250K in the last 6 years though, including compound interest paid to date. I figure we will have $500K when I pack it in. It's not enough to live here in North America, as I think pensions will be broke or useless due to inflation....but for Brasil, where we are going back to, $500K is a "kings ransom".

I had a great life and many excellent memories that are all paid for, but not enough cash as I should have at my present age. My net worth is $310K ($250K cash in a high yield saving account and a $60K condo in Rio de Janerio that is paid for) and I am debt free.

My advice for those out there today is buy foreign property RFN (right f-in now).....as it is dirt cheap and retiring on a beach in a cheap country is much better than living in the US or Soviet Kanuckistan. Also, never go into debt.

I have rented all my life......do the math before you buy.

What worries me is the coming depression and stagflation as I lived thru the 70's......

What gives me hope is the diminishing time till I go....7 years left to go !!!!

Anonymous said...

Biggest Mistake - not doing a "year abroad" when I had the chance in college.

I did it in Paris and my brother did in Sweden. It's overrated. All we did was drinking, partying, and getting hot p*$$y. Lots of museums in between.

Anonymous said...

My advice is that the price of MRE entrées at Cheap As Dirt is pretty good.

Anonymous said...

And after a majority of the middle class voted republican for the last 30 years, they're joining the poor.

Yep, after the Democrat majority in the House and Senate started running the place for the last 2 years. What, not enough time? How much time do you need to stop coming up with wasteful and criminal bills such as "bailout for housing fraudsters", "billions in subsidies to rich farmers", "amnesty to millions of illiterate illegals who will be breeding like flies while sucking welfare". But look overhere sheeple, the democrats are approving gay marriage, so everything is swell now. That's priority!

Anonymous said...

My advice... be careful of marriage and having kids these days.

On the average, the average fellow is in trouble these years whereas back in the 50s/60s and up till the late 70s, love/marriage to horse/carriage was still viable.

Anonymous said...

None of the 65 and older crowd has mentioned a major factor in the strategy that they used:

Make sure the politicians put into place a program to extract money from the next generations (i.e. Social Security).

Make sure the politicians don't cut or get rid of Social Security.

Make sure that the politicians only tax 4% of wages, or less, to finance Social Security while working (this leaves 4% to save while "living within your means")

Make sure wages keep up with inflation (and that inflation is accurately reported).

Once retired, allow the politicians to take more than 8% of the wages of the next generations (this gives the added bonus of giving a pretext to look down on them for not saving the 4% per year that you saved) to continue paying for the Social Security that you made sure would be in place at their expense.

Anonymous said...

keep working your asses off and helping me with my social programs....

Reality said...

"I gambled and speculated every chance I could"

So what's your average return on your gamblings and speculations? If your ROI is high enough, all the money-wasting entertainment in the rest of your post would still be living below your means. On the other hand, if your ROI is low, then your gamblings and speculations are just paying for other people's fancy cars and entertainment.

If you have to borrow to pay for your entertainment, then you are essentially a debt slave on top of being a wage slave: if you make $100k a year, and have a $200k debt at 9%, then you are basicly volunteering for a 18% income tax hike.

Anonymous said...

"but for Brasil, where we are going back to, $500K is a "kings ransom"."

Ha! It seems that you haven't been in Brazil for a long time. I was an expat there for a few years, working for an American company. If you think that you can retire at 55 there, and still be middle-class with only 500k CAD until you die, you're so mistaken. A very small apartment is at least $200k, if you are willing to live in the boonies. In Rio, that price is much higher, as you know. Then you have Lula's socialist regime destroying the middle-class with taxes hitting 40%. Anyone earning over R$1,300 per month is considered middle-class there. So prepare to give away 40% of that 500k egg's nest when you arrive, then prepare to pay fees like crazy at banks. No wonder Brazilian middle-class has shrunk 10% since Lula took over, and there's no end in sight. All this talk about booming economy there relates only to the same people: rich families, monopolies, commodities, politicians, etc. Lula is transferring wealth from the middle-class to class C and D, just like Obama will do in the US.

TM said...

"We lived below our means." How 'bout a cost of living reality check 1958 vs 2008??? "Our wives never worked." see today's cost of living.

Your comment is understandable, given what we're told we need nowadays, but--no offense--you're the one who needs a reality check.

Think of what an average middle-class family in the 50s had. They usually had one car. They often owned their own home, but it was usually under 1500 square feet and didn't even have air conditioning, much less the whirlpool tubs and granite countertops. Eating out was a rarity; take-out was a rarity; the mother of the family cooked almost all meals, meals that we would consider pretty basic. Credit cards hadn't become mainstream yet. Vacations tended to be pretty modest by our standards, usually involving a trip somewhere within 100 miles of home.

If you decided to live pretty much exactly as they did you too could live off one salary, send your kids to college, and retire comfortably.

Much of the problem lies with expectations. Wages, factored for inflation, have more or less stalled since the 70s, but our expectations and notions of what we deserve has continued unabated.

Anonymous said...

My family and my brothers family are all living job free in New Zealand at ages below 44! We did this by building and selling homes from 1996 to 2004 while also working full time jobs,saving our cash and living cheap. We both have paid off homes on a shared 350 acres of land in the San Luis Obispo area which we rent out. Even with cash it is not possible to retire in CA due to the very high costs of living. So our solution was move to a socialist country which every where else in the world that speaks english (NZ, GB, AU, CAN). Here we get 9% on our savings, lower taxes, best ever health care for free!!!, trash cost 1.50/wk, cell phone is pay as you go, meat and sea food are cheap, cars almost free (due to left hand drive imports from Japan),... All in all its the way to go. Anyone under 45 needs to be applying now to another country before world recession blocks you out. As they say head west young man, AU or NZ. Your not going to make in in the USA, because someone will have to pay the 53 trillion debt and its not meeee.

Anonymous said...

I still couldn't buy the house my parents bought in CA, over 30 years ago. Even if I lived in a cardboard box.

Anonymous said...

If you don't think every generation or human is selfish ,your wrong . Humans are self-serving .

Every generation thinks the other generations had it made in the shade ,but it's not true . I don't like the direction the Country is headed in ,and I think a lot of changes need to be made, but every age group or social class thinks their group is deserving ,while the other group isn't.

I think in the years ahead it's going to be hard for all age groups ,including seniors on fixed incomes

Anonymous said...

"And above all - DON'T BUY A DAMN HOME, or a time-share, or a boat - rent 'em for pennies on the dollar. "

Agree about time shares. The rest is bullshit. I will agree that buying a NEW boat is stupid since boats depreciate about twice as fast as cars the first 4-5 years then plateau and depreciate almost nothing the next 10 years. I bought a used boat for $8500 that cost $32K new. With good maintenance it could last me another 15 years easy. Renting a comparable boat costs $200 to $250 a day. You do the math on which is a better deal.

As for not buying a house: my parents are 63 and 60. My mom's been retired for 10 years. She was a teacher, has a decent pension. My father is an engineer and is semi-retired, working part time on a project here and there as an advisor. They bought their 1st and only home right after getting married in 1976. The cost was a whopping $48,000. They paid off the mortgage in 1988. They sold that house in 2003 after my youngest sister graduated college and left home. So aside from taxes and insurance, they lived for free for 15 years. Selling price in 2003... $872,000. Indeed buying a home was an awful, idea.

Reality said...

Anon 12:14,

You parents didn't make out as well as you may think. The nominal price for the house in 1976 may have been $48,000, but the price of gold was around $105! That makes the $48,000 worth over $400,000 in today's money. Interest rate was 7%, let's suppose your parents' property tax rate was 2% (very low for that time), plus insurance and maintenance/expansion another 2% . . . that's 11% a year. I wouldn't call $44,000 (in today's money) throw-away housing expense before any principal payment as rent-free. Your parents would have pumped close to $800k (in today's money) into the house by the time they paid off the house 12 years later. Then, it was just around 4% a year; still, that's $16,000 a year on a $400k house (assuming the $875 eventual sale price was bubble price level, not due to expansion, which would result in higher tax, maintenance and insurance).

They did far better than the average family that pay off mortgage in 30 years. However, those 30-yr debt slaves would have bought 2-3 houses for the bank if interest is 6-7%, and nearly two thirds of a house for the town/county (assuming 2%) by the time they have full claim to the house (and still subject to further property tax)

Reality said...

Correction: mortgage interest rate in 1976 was 8.75-9%! not 7%, which was prime rate in 1976. So your parents would have paid even more in interest payment (i.e. "throw-away money" just like rent). Their outstanding balance shrank in subsequent years, but run the numbers in spreadsheet yourself, at close to 9% interest rate, the borrower would pay nearly double the principal amount even if the loan is paid off in 12 years! In a typical 30-yr fully amortized mortgage at nearly 9%, total payment to the bank alone would be nearly 3 times the originally borrowed amount! That's why it's called mortgage: french for "death grip"!

theloknesmonster said...

"Reverse the mortgage when you can after age 62. You and your wife have a home with no payment until the end. To hell with the kids... Look after yourselves."

Now there's a typical baby boomer asshole if I ever heard one.

Make sure to put away some of the money for your funeral, which your kids won't be attending, unless it's to piss on your grave.

Joe said...

What did you really do right in your life?

Swallowed the red pill!

What could you have done better?

Swallowed the red pill earlier!

Were you prepared for retirement?

Nobody is prepared for retirement!

What was your biggest mistake?

Sucking on the blue pill for so long!

What worries you the most?

The matrix blows up and J6P goes bozo!

What gives you the most hope?

TPTB get rounded up, tortured and then hang in public.

Joe M.

Anonymous said...

reality, you are obviously not very good at math. you don't add maintenance/insurance to interest rate. doesn't work like that.

and you forget that they put down only a small % of the $48,000. i dont know what it was but assume it was 20%. so they put down $9600 and got out $872,000. plus 15 years of imputed rent which i would average at $3000 a month which is another $540,000.

So on a $9600 investment they made $1.4M. If you think that was a bad investment you are truly a moron.

using your gold scenario they could have bought 91.4 ounces. Today with gold at $900 that would translate into $82,260.

Hmmmm $1.4M or $82K...tough choice.

AmazingRuss said...

"Make sure to put away some of the money for your funeral, which your kids won't be attending, unless it's to piss on your grave."

You make a very strong argument for birth control.

Carioca Canuck said...

Anonymous at 12:21 AM......

Glad to see you got to live there for a while....I wish more people could.

I don't want to come off as confrontational here....so don't take it that way, I would just like to address a few of the points in your post with some info that you may find interesting and not be aware of.

I checked my old and current passport....there are 42 stamps from the DPF....therefore that is 21 trips there in the last 7 years. My last one was in March of 2008....wifey and I stayed at our place for a month. We have our condo in the same block as the Siquiera Campos Metro station in Posto 4, Copacabana (Rio)....3 blocks from the beach.

You can buy a great place in Copacabana for $100K CAD (R$200K) and do not need to spend more....of course, you can if you wish....with 5,000 sq ft beachfront penthouses running $1-2MM USD. How many links of RE for sale do you want me to post ?

We spent $1000 USD in that period, for lunch every day at comida a kilo restaurants, plus drinking chopp and caiparinhas every day...plus gas for our car, and a little shopping. With $500K CAD I can get a rate in Canada today of 3-4%....which is R$30-50K per annum....it's enough to live there very comfortably. Of course, if our Canada Pension Plan is still solvent when I am 65, I will have another $1000 CAD from that as well....plus my wifes two pensions which is another $2500 CAD in addition to our interest income.

Brasil has a tax treaty with Canada and we both have CPF numbers (Brasilian equivalent of your SSN or our SIN) and she is registered as a non-resident. What that means is, she can bring as much money as she wants tax free to Brasil, as long as it does not exceed her earned income while living here. Therefore, 6 years here so far for her and 7 more to go = $1.4MM tax free entry to Brasil. I plan on having bank acocunts and a phantom address here.....so I can keep my money where ever I want. In Brasil I can by government bonds for a 13% rate if I wish.....etc...etc...

When she worked there under Lula she made R$5000 a month and paid 15% tax......my sister inlaw makes R$100K and pays 25%.....I checked the Receita Federal website and there is nothing there about 40% tax for citizens.

BTW Lula is done and cannot be reelected....and the general population hates the PT Party now.....

Anonymous said...

Now there's a typical baby boomer asshole if I ever heard one.

Make sure to put away some of the money for your funeral, which your kids won't be attending, unless it's to piss on your grave.


My parents never sent me a b-day or xmas card, nor paid for my college, and then stiffed me with a huge bill of late taxes and funeral expenses. After I divided the little house between all the irresponsible siblings, who didn't put a dime to pay for expenses, it wasn't enough to get my money back. Now the siblings took over the house and are in a nasty fight between themselves. Funny how my property taxes or my funeral nobody from the family is going to pay for. Preservation of wealth is foreign to baby boomers...and they sure like to screw Gen X.

Reality said...

Anon 6:03pm,

"you are obviously not very good at math."

That would be a good description of yourself.

"you don't add maintenance/insurance to interest rate. doesn't work like that."

Yes you do if you want to calculate the carry cost of ownership; i.e. not part of the $48k in 1976, but your parents still had to pay as consequence of the ownership.

"So on a $9600 investment they made $1.4M."

What planet are you on? Your parents got a house without making any principal payment? no interest payment? no tax payment, no insurance, no maitenance at all over 28 years? There's noway rent on a house can be the same as a 12yr mortgage payment; 1/12 the princpal amount perhaps but interest at 9% results in a substantial interest payment even for a 15-yr schedule. Ignoring interest payment is just silly; if can find free rent on money, why not find a place where you can get free rent on house itself?

"plus 15 years of imputed rent which i would average at $3000 a month which is another $540,000."

You are kidding yourself if you think a house like that could collect $3000 rent in 1988, or that your parents don't have to pay taxes, insurance and maitenance for 15 years . . . all of which would be covered in a $800 rent for renting a house like that back in 1988. In the recent peak, a $875k could probably collect a $3k rent, while the tax, insurance/maintenance probably eat up $2k/mo . . . goes to show that your parents simply took the retirement from someone else just like my selling JDSU at over $200/sh back in 2000 (currently trading at $12) simply meant I got out in time and took advantage of the willing fool that bought from me; no proof whatsoever regarding the virtues of buying speculative stocks shortly after IPO and mergers.

Yes, in the three decades from 1976 to 2008, house ownership generally would have worked out slightly better than renting. . . however, the difference is nowhere near what most people think. The housing appreciation over 30 years was only comparable to gold appreciation (from $100 to $1000)and DOW Jones appreciation (from 1k to 12k). That was during a prolonged housing bull market, and assuming no moving (i.e. not being cut to pieces by the 6% fee all the time). The carry cost of houses as a form of investment is enormous: the 2% property tax and 2% insurance and maintenance cost every year really add up. If you have a 9% borrowing cost on top of it, the carry cost becomes astronomical. You can't talk about appreciation of an asset over decades without talking about carry cost.

Anonymous said...

"I checked the Receita Federal website and there is nothing there about 40% tax for citizens."

The taxes mentioned refer to "carga tributaria" on anything you buy + Federal taxes + IOF + CPMF (back in the future?), etc. It's not tax bracket only. Here are some articles about it:

http://tinyurl.com/5eyc4k

http://tinyurl.com/5vby62

Don't forget that investments there (i.e., CDB, Fundos DI, etc) have high administration fees that sometimes reach 5%, hence all the record profits that Brazilian banks are enjoying lately. Add to that taxes of 10% for investments in "renda variavel" and 20% for "renda fixa". Savings is exempt, but pays low return.

The price of a gallon of gas or ethanol is more expensive in Brazil than in the US. Do the calculation. A new Honda Accord 2008 costs R$100k in Brazil (=US$60k). Here are some examples of taxes you pay in Brazil:

Soft Drink = 47%
Beer = 56%
Water = 45%
Cachaca in caipirinha = 83%
Electricity = 46%
Detergent = 41%
Cement = 40%
Electronics = 38%
Sugar = 41%
Cellphone = 41%

Source: www.facesp.com.br

Avg Interest Rates for May 2008:

Checking Account = 96%
Revolving Credit = 42%
Car Loan = 27%
Credit Card = 26% to 100%+
Mortgage = 14%

Source: http://tinyurl.com/6g3eqn

Electricity is more expensive than in the US, broadband is a rip-off for less bandwidth, a good michezinho is $200 (a joke for insiders only).

Perhaps you got a good deal on your apartment or even inherited it, but for $100k CAD (aprox R$165k) you can only buy a dump in Copacabana sans garage, with lots of transvestites and hookers as neighbors. Who in the hell wants to grow older in Copacabana where you often have to duck for "bala perdida"?

I love Rio, always go there to visit friends, love "as cariocas", but your figures are highly optimistic, especially if you don't calculate "carga tributaria". And you sister's bracket should be 27.5% for R$100k income.

I've graduated and been working in Finance for more than 20 years, including a few spent in Brazil and Europe.

Carioca Canuck said...

Anonymous at 12:38AM.....

Stray bullets do not concern me at all.....I don't live in Complexao Alemao, Cidade de Deus or Vidigal. There have been 5 people murdered in the last 2 years within a 3-4 block radius of my downtown Calgary high rise apartment. The last one was yesterday at on subway platform one block away......

http://tinyurl.com/5cg4dz

3 have been killed around there and 2 were killed outside bars within the same radius of my place. I read OGlobo every day and talk to my in-laws every day as well....no one has been killed within a 3-4 block radius of my Copacabana apartment since we bought it 6 years ago (we paid $60K USD at the time R$160) This morning wifey says to me that she feels less safe here than when she lived all he rife in Rio. There are PM's on pretty much every street corner in Copa, and in fact we live beside the 29th PM battallion HQ. Safety is the reast of my worries.

Hidden taxes exist here as well.....a chopp in Rio is R$2.00 to R$2.50....a beer in Calgary is 6time as much....the jeans I am wearing cost R$14.00 at Taco....here they are 5 time as much, I can eat at Fino Paladar (comida a kilo place) for R$ 12.00....here is is 3-4 time as much....etc...etc....

Anyways, I have to go to the office now, so when I get there and have some time today, I will loctae and then post some Rio RE listings for you to peruse.....

Anonymous said...

@ carioca canuck

Here are some headlines:

http://tinyurl.com/43mg4j

http://tinyurl.com/47r8ly

http://tinyurl.com/4sr8yx

http://tinyurl.com/2dpmwt

Then you have the Portuguese tourist that was also stabbed and I can go on and on and on...

Anonymous said...

@carioca canuck

I hope you're getting a huge return on your investments in Canada. The IGP-M (inflation) is 11.53% for the last 12 months:

http://tinyurl.com/3ej3xt

Add to that skyrocketing taxes to see your returns and standard of living melting away.

And here's the latest that happened close to Av. Princesa Isabel, right after the tunnel:

http://tinyurl.com/69n8mw

Simple is better said...

I have no major regrets. However, my second marriage was with the right spouse, and i wish she had come along ten years before!

Saved despite some bad money decisions, and am going to retire at 55 no problem. Live below your means and be happy with simple but important blessings.

Anonymous said...

Thanks to all for the great advice! Most good, some bad, but overall a good bit of info to digest.