Retirement Fun for Boomers and Beyond
I should note that I do not have a crystal ball or a product to sell which will magically fix all the problems I am about to discuss. I am also not an accountant or a financial advisor or anything like that so nothing I say should be seen in that light. By all means read what I say and think about it. If you decide it might have some merit then consider it in your plans. However don’t just mindlessly put a lot of money into this or that because I (or anyone else) talk about it if you do that you are a fool and deserve all the bad things that could happen. Be an adult and make your own decisions because you will have to live with them.
With the slew of municipalities being broke and having insolvent retirement funds, corporations dumping pensions whenever they get any excuse and a whole bunch of states broke I would be concerned if a pension was going to fund my retirement. Heck even the federal government isn’t doing so great. Consider what would happen if you pension was radically reduced or even defaulted entirely.
Also if you haven’t noticed the USA has a real problem with welfare social security and medicare. Like the level of problem Charlie Sheen has with vodka and cocaine. Social security was started by commie FDR with benefits at 65 when people on average died at 62. Also there were lots of workers to pay for it. The numbers don’t work and are rapidly getting worse. Too many people are retiring and not enough are working to pay for them.
I imagine a lot of small things will be done to try and bend the exponential curve of welfare entitlement costs.The are to collect full benefits will likely go up, well off people will be charged on more of their income (I think it’s 100k right now), and some sort of a means test will likely appear. I believe all of this will only succeed in kicking the can down the road a few years.
Also more significantly generations X and Y realize we are never going to collect meaningfull social security. As boomer politicians screw us with higher rates of theft contribution we will get pissed. Pretty quickly we will get into an age demographic that votes at a far higher percentage and are a significant force there is going to be a reconning. I am not sure how we will screw you the boomers but I bet we will. Best case is that they are going to be paid in inflated dollars. On a more gloomy side it could be significantly inflated dollars. Worst case for them the welfare social security checks will stop entirely.
My point here is that you should plan for retirement without counting on a pension OR social security. If you can collect either of them then go for it. However personally I would want to be able to support myself without either and just have them as icing on the cake.
In an even darker scenario the dollar and subsequently paper investments denominated in the dollar could take a nasty hit. Maybe it could be a slow slide or a fast crash, I don’t know. In any case the have money in investments and live off interest/ dividends plan would fail in this scenario. To be honest this is relatively unlikely (slow slide to a currency among many versus world reserve currency and a moderate loss in purchasing power is more likely) but it would be a bad one. Most retirees would be devastated. The truly rich would generally be fine (somehow they always are) but middle and upper middle class folks would mostly be destroyed.
What can be done for those who are worried about this relatively unlikely (the extreme version anyway) scenario? The first thing that comes to mind is to have your basic financial house in order. For those close to retirement age having very minimal or no consumer debt and having your primary residence paid off is so huge. I watch a lot of those financial shows and the amount of people who are trying to retire with car loans and very little equity in their home (let alone having it paid off) baffles me. If you are debt free and retire then something happens so you face a drop in income at least this way you can shred your expenses. It would suck but as long as you can pay property taxes, fuel and food you will be OK if not happy. However if your pension fund fails/ the stock market and subsequently your investments collapse and you have all sort of stupid consumer debt and a high mortgage payment it will get ugly fast.
My next thought also flows well with what is likely reality for most boomers. The reality is that many of them saved like they have a cushy defined benefits retirement plan when in fact they have a 401k. Too many of them continued to upsize their home and used home equity like an ATM instead of paying off their home. Fundamentally a lot of people are approaching retirement age and just can’t afford to retire, at least in the way the Greatest Generation did. Some will be able to retire and live modestly (versus lots of travel and recreation) while others will need to keep working in some capacity or another.
The advantage is that earned income (vs from dividend’s, stocks, interest, etc) is pretty flexible. You can, at least in theory, renegotiate the deal for future services to reflect a changing economic situation. That could mean getting paid to reflect the real value of currency, in a stable currency, PM or barter. Hard to do that with your pension or retirement account. If something this ugly happened a lot of people would be headed back to the workforce in a seriously damaged economy. The way to get ahead of the game would be by working in some capacity already. Maybe you could work part time, consult or just have a couple clients. Even a modest income could (in addition to making todays retirement economics more comfortable) be the difference between making it and not.
Where you choose to put your money is important also. I am not against precious metals for an alternate currency/ store of value but have concerns about them for retirement. The reason is that they do not benefit from interest, dividends, etc. Every silver dollar or gold eagle you spend is coming strait out of your principle.
The reason that truly rich (maybe wealthy is a better word) people do not get wiped out is that they own businesses and real estate that produce income for them. If currency values change radically a solid business will continue to earn some money. People will continue to rent apartments, homes and commercial space.
Things that produce income are good things to buy. A lot of the downsides of real estate (and to a lesser degree businesses) are minimized if you pay cash. I would rather have some money in the bank and the market and a modest rental house or twelve in decent areas earning me income than a bunch of money in the market.
I don’t know what is going to happen so I hesitate to suggest putting all your eggs in any basket. If your finances are in order, you earn a bit of income and have at least some of your money in tangible things that produce income odds are you can weather whatever comes.
Thoughts?
New Years Resolutions 2011
I am doing things a bit differently this year. Breaking goals down Suze Orman style by people, money then things seems to be a good way of categorization. Some goals are going to be conducted consecutively. For things I took a stab at prioritization.
People:
1. Maximize family time. I think spending at least a hour of good undivided family time a day is doable on all but the longest work days. More on weekends.
2. Take better care of myself. I need to work on getting at least 6 hours of sleep even when I get off work late. Also I need to eat more regularly (I have started to get busy and just not eat) and like most people could also consume more green stuff. Find a suplimentary (to regular PT) exercise program that I can really stick with. I got busy and this goal sort of ebbed/ flowed and then just slipped away over the past year. I’m not in bad shape but could definitely be in better shape.
3. Better prioritize tasks and be more efficient.
Money:
4. Become debt free- Should be done in by the end of March
5. Fully fund ROTH IRA’s for Wifey and I.
6. Add at least $500 (ideally $1,000) to our emergency fund.
7. Buy some silver. It is somewhat flexible but am leaning toward 90% coinage. I hesitate to say an exact amount because as I noted last year price swings change those goals from being realistic to unattainable.
8. Start funding Walkers college education.
Of course we will also continue to not make stupid choices.
Skills and Education
9. Study insurgent/ guerilla/ partisan tactics. This has the added benefit of being ‘red hat’ stuff for work.
10. Get better at first aid/ trauma stuff.
11. Shave with a straight razor. Sharpen it also. (implied task, get a straight razor)
12. Work on making antennas for world band radio’s and tuning into a variety of stations around the world.
13. Get better at using Excell. Particularly writing formulas to get the most out of what the program is capable of. This will help me with work, blog stuff, preps and life.
14. Learn more about IED construction, emplacement and use.
15. Read a couple of significant books. I wouldn’t say classic but but old, noteable type stuff. In particular Edward Gibbon’s The History of the Decline and Fall of the Roman Empire is on my list.
Alternates- Skills are an area where things seem more prone to changing due to factors beyond my control. I decided to come up with a few alternatives against that scenario.
Get better at making flat bread
Learn some HTLM
Get better with Powerpoint
Things:
Family/ Life:
16. Probably going to purchase another vehicle. A fairly low mile mid sized SUV with a decent sized 6 cylinder engine (3.5Lish or above) and 4WD. It goes without saying that we will pay cash.
Prep Stuff:
I did a couple of things differently here. I broke stuff down by category. Also if you notice there are numbers after the goals. Those numbers are a tenative plan on what order I will acquire this stuff.
Force Protection Stuff-
17. 1x bullet proof vest. Probably class II or IIIA concealable type-2
18. 3x gas masks-9
Firearm Stuff-
19. Folding stock for my AK and a US palm grip-1
20. 500 rounds of .38 special-5.1
21. 500 rounds of 12 gauge buckshot-5.3
22. 1 case 7.62×39 hollow points-5.2
23. AK spare parts-11
24. Buy more mags. In particular a few more Glock happy sticks and a half dozen each for the AR and AK. I am not in a bad place but if I happen to have a couple extra C notes lying around in the late fall this is where they will go- 12
Food and Water-
25. 4x Berkley black filters-3
26. 1x Katadyn replacement filter-7
27. Nice solar oven-4
Energy and communication-
28. Bigger and better solar trickle charger (folding mat type)-10
29. Compact world band radio-6
Random
30. Get 2 spare Cold Steel folding knives (my EDC) and a leatherman for a rainy day-8
What are your thoughts about my goals? Do you have goals? If so would you like to share them in a comment or a guest post?
What Did You Do To Prepare This Week?
The biggest thing was that I ordered an ACOG from Idaho Preps. Been planning and saving to purchase an optic for some time. Hadn’t thought I would be able to afford what I wanted but the good folks at Idaho Preps reached out to me and were able to make it work. Really happy that at the end of the day I was able to get one.
I also opened up a ROTH IRA. We had been saving for awhile and this week we signed up for an account and all that stuff. Pretty psyched about the whole thing. Made a few bucks so far which is just cool.
Picked up a few odds and ends of canned and staple stuff at the store. Stocking up a little bit but probably for the most part just rotating what we already have. Sometimes the stores on post have weird super cheap sales for no real reason. I guess they get too much of something or their stocks are getting old or whatever and so they sell it for half price. This week they have Natural Light Beer for $3.25 a twelve pack which is half the normal price. I got 4 of them to stash away as a beer reserve.
Been looking at ammo as my inventory of 9mm isn’t quite up to my own standards. A case of Federal hollow points is pretty darn tempting and would put me in a good place. I’ve got to save a few more bucks before I can seriously consider that purchase. Really can’t complain because I just ordered a sweet rifle scope.
A very solid week for me. What did you do to prepare?
A New Passion
We opened a Roth IRA a few days ago. I went to the site to screw around and read some stuff today. Out of idle curiosity I checked our balance. We made some money, a bit less than 20 bucks. This is really exciting. I earned money without doing anything. More aptly my money earned me some money. This is so awesome I don’t even know what to say. It isn’t a lot of money or anything but it is just really cool.
There is lots of talk about inflation and all kinds of stuff. I can’t say that I think the next few years, and maybe even decade will be rosy. However I differ from some folks in what I am doing now. One notable reason for the difference between my perspective and that of many fellow survivalists/ bloggers is age. What is a horrible situation to someone who is 50 is a buying opportunity for me. Particularly when I am investing for retirement my time line is very long.
Anyway this is just really cool. My money making money of its own really motivates me to keep saving and investing. Eventually if I get enough money working for me I can sit back and enjoy life while it supports me. I guess it is good to have ambitious goals. This doesn’t really have much anything to do with preps or that stuff. However it got me more excited than anything except Walker has in recent memory. Anyway I think it is pretty cool.
Paying Yourself First, Diversification and Such
Every once in awhile I read something that just makes my head spin. A few days ago Chief Instructor wrote one of those posts and I just got around to reading it today. I commented on it but it it has stuck in my head. I was trying to go to sleep today at about 2 pm [Kiddo is kinda all over the place in terms of sleep schedule. We’re kinda sleeping when we can.] and the wheels were just spinning. I should probably mention that I spent all of last night watching the BBC news and reading various financial stuff online. This post is brought to you by the above two influences plus a bit of narcolepsy.
The concept of paying yourself first came to mind. Basically the concept goes like this. Before you pay your bills, before you buy groceries, before you do anything else, set aside a portion of your income to save. Put the money into your 401(k), your Roth IRA, or your savings account. The first bill you pay each month should be to yourself. It is just so easy to say that you will save later when you make a bit more money or just vaguely in the future. Especially when we talk about far off concepts like retirement it is easy to say you will start saving next year.
I don’t think it is entirely accurate to say that even practitioners of this idea truly pay themselves first. The reason I say that is when push comes to shove few people will make their 401k/ Roth IRA/etc contributions before say paying the electric bill and buying groceries. It would probably be more accurate to say that after you pay basic operating costs (housing, energy, food, fuel, etc) you make that contribution before the discretionary stuff. In any case the key is that you are putting a regular amount into whatever investment vehicles you choose on a regular fixed basis.
I was thinking that it might be prudent to use the same sort of spirit when it comes to preparedness. So often people really want to do great things but money or a lack thereof holds them back. Putting a regular fixed amount into whatever kind of preparedness goals you have on a regular set basis can go a long way towards solving that problem. It won’t be a cure all but it will probably help. Maybe it is food storage or gear or water filtration or who knows what but this should allow you to meet reasonable goals over time.
I was listening to this video by these financial management people (they didn’t mention till halfway through the presentation that they only talk to people with TONS of money, grrrr) and they did a lot of talking about asset classes. Stuff like specific types of stocks, bonds and the like. The smart people will say that to meet certain goals you will want certain amounts of different stuff.
For awhile I have applied the same kind of thinking to preparedness but without such an articulate explanation. Stuff like food storage, medical, firearms, ammo, alternative energy, spare clothing, gear, etc. I don’t know exactly what the right percentages are but it is smart to balance between these different classes. A bunch of one doesn’t make up for not having any of another.
The topic of precious metals is interesting these days. I think it depends so much on where you are at and what you want the money to do. Precious metals are a good non dollar denominated liquid asset. However they do not earn interest or benefit from compound growth. I have some real reservations about going big into PM’s all at once (versus dollar cost averaging) especially when the market is high. The time when one might reasonable want to shift their liquid assets to 30% metals by buying a some silver and a couple rolls of one ounce rounds is probably a year or two past. Some folks say gold and silver will go way higher. I don’t know if we are at the absolute top but I do know it is bad to be the last one to buy into a commodity upswing. Personally I’m buying silver right now and won’t purchase any more gold until it corrects significantly.
I suppose that just like anything else you’re open to make your own decisions. If you are absolutely positive that anything in stocks or dollar denominated will go into the can then betting heavy on precious metals makes sense. I do think however that hedging your bets is a sound idea. Some classes of assets like stocks tend to run hot while bonds run cold and visa versa. Sort of like dollars and euro’s or dollars and gold.
One trend I see in survivalists is to just go all in. Folks get an idea that this or the other thing might happen then bet everything on it. I don’t really understand this. To me a huge part of survivalism is managing risk. I want to be able to do OK if the economy tanks and also do OK if it does well. Managing your risk by having plans to succeed if our economy goes up, down or sideways just makes good sense.
Thoughts?
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