"Entitled Selfishness": Great article on the dismal future of Social Security

[dvcgirl]

ducklite,
I started to save for retirement when I first entered the work force. My grandparents said it was important to save for retirement (they were just getting themselves set into retirement at that time). My grandparent's lifestyle was a modest one, but they always had everything they needed/wanted-no worries. I didn't have a clue about finances, but I saw how they had prepared themselves. I started an IRA when it was first available and then it spurred me on to do more research and learn more and do more planning.
Without having my Grandparents example, I doubt I would have thought about funding retirement in my 20's or even 30's.
I think that parents/grandparents have a huge influence on passing along this type of information to their kids. (Maybe this board might serve to increase awareness and spur folks on to more retirement planning, too.)
-DC

For me it was my parents. My father had a pension, but he could see where the future was headed and told me I'd need to "create my own pension" inside my 401K. Plus, I already had the lesson from both parents of living below my means.

I also agree with Mrs. Pete....there are far more temptations in our world today, making it difficult. Yes, personal responsibility is the key, but too many young people are racking up too much debt. People in general just don't seem to get that because you can "make the payment", doesn't necessarily mean you can afford the item.

And finally, people will spend hours and hours each year planning the family vacation, and yet very few spend ten minutes on figuring out how they'll survive the final 25 or 30 years of their lives. It's all about living for today, having fun right now, instant gratification. Heck, I've seen spreadsheets and detailed economic breakdowns in an effort to show the "break even" point when buying DVC......I mean, Greenspan would be impressed....lol! Pages and pages and pages are dedicated to thinking that process throught. "Should I buy???" is mulled over again and again. And I'm betting that 2/3 of those people haven't given much thought at all to retirement.

 

[MrsPete]

Personally, I am not a clothes guy. When I do buy clothes, I very rarely buy used because I simply haven't found a good source in my area.

You and my husband! Let's say he walks into church wearing a new shirt or jacket --here's a typical conversation:

Friend -- "Nice shirt. Where'd you get it?"
Him -- Looking down, rather befuddled, wondering it if is new, or if he's just forgotten that he has it: "The foot of my bed."

On the other hand, he ALWAYS thinks EVERYTHING I'm wearing is new.

Him -- "Is that a new shirt?"
Me -- "Um, no, you bought it for my birthday two years ago -- look, I've worn it so much that the hem's coming out."
Him -- "Oh, well, you should wear it more often. It looks good on you."

Clothes -- my husband -- no clue. And this is a SMART man! A degreed engineer!

Even a couple of DD's Chanukah presents this year were bought used online. She knew I got them used and couldn't have cared less. All she cared about was that she got the DVDs she was asking for. We're doing our best to teach her that there is no harm and certainly no shame in shopping secondhand because it leaves you with more money for other purposes, including saving for the future.

We've done exactly the same thing. DD's number one Christmas request was an ipod (which I bought new from ebay) and some specific CDs (which I bought from ebay). We've always taught her that it's wise to look around and choose the best value for the money -- she didn't even blink at the fact that the CDs were unwrapped.

However, I'll throw out something that makes a world of difference: I grew up a poor kid, and we HAD TO shop at Goodwill, yard sales, etc. It's one thing to buy used when you have a choice; it's miserable to do it because you have no other options. I try to balance it out: We have a great source for used jeans, and we buy tops and even shoes used when we can . . . but I also balance it out by letting the girls pick a few things from Target or the mall. They understand the point in a juvenile sort of way, and I think they'll both become smart shoppers as adults.

 

[MrsPete]

My son is a big gamer. He buys almost all of his games used. A video rental place near us went out of business and he bought about 20 PS2 games for $3-5 a piece, originally $30 and up.

Anne

Yet another reason to be a saver. Even though he spent only $3-5 per game, 20 games at once was an expensive purchase ($60-100)! If he had been the type who spent every penny within days of getting a paycheck, he wouldn't have been in the position to take advantage of the bargain that day!

 

[kinntj]

I didn't mean that you, personally, should have bought used jeans. I was just making the point that when one needs or wants something, whether it be a pair of jeans, an iPod, ziploc bags, dog food, whatever... there are always multiple options as to where to shop, some cheaper, some more costly. We all get to pick which of those options is right for us and right for our budget. Personally, I am not a clothes guy. When I do buy clothes, I very rarely buy used because I simply haven't found a good source in my area. My wife and daughter, however, do really well at Goodwill and the local thrift shops. Now when I want a DVD, I rarely buy new. I know I can find used copies online for a fraction of the original price. Even a couple of DD's Chanukah presents this year were bought used online. She knew I got them used and couldn't have cared less. All she cared about was that she got the DVDs she was asking for. We're doing our best to teach her that there is no harm and certainly no shame in shopping secondhand because it leaves you with more money for other purposes, including saving for the future.

oh, I know you didn't mean me personally. I just knew you guys (selected DISers) were talking about it before and I wanted to start to shop there.

I agree that there are certain things that should be bought used, so you're not dumping all your money into them. I have a list of 10 items that you shouldn't buy new, but I forgot what the majority of them are. I know some are dvds, books, cars, cd's. just to name a few.

You're giving your DD the best gift of all...responsibility with her money. Her future is looking bright already. I plan on doing this with our DD's too. Next Christmas we're planning on just having Santa drop of a present and then give both DD's Disney dollars for the 2008 WDW trip. I want them to learn that we're sacrificing a little bit just to have that one big thing.

 

[MrsPete]

For me it was my parents. My father had a pension, but he could see where the future was headed and told me I'd need to "create my own pension" inside my 401K. Plus, I already had the lesson from both parents of living below my means.

My nine-year old recently had a lightbulb moment: We were visiting my 94-year old grandmother (who lives alone in her own house and is in excellent health -- we should all be so fortunate!), when my daughter asked me quietly, "Mommy, Mimi doesn't work; how does she get money?" I asked my grandmother to explain retirement, Social Security, and pensions to my daughter, which she did gladly. Emily's eyes were HUGE, and she took in every word breathlessly. She asked good questions. She came away with the idea that it's important to work, to save, and to plan -- and since then, she's asked me questions related to that conversation: "Mommy, what if you . . ., Has anyone ever . . ., What happens if . . . " That conversation's still kicking around in her little nine-year old brain.

I've got a smart daughter, and she's got a great-grandmother who cares about her.

 

[MrsPete]

I agree that there are certain things that should be bought used, so you're not dumping all your money into them. I have a list of 10 items that you shouldn't buy new, but I forgot what the majority of them are. I know some are dvds, books, cars, cd's. just to name a few.

I'll argue with one of those: Cars. We've bought used cars for years (the bought-used Ford Explorer in my driveway has given me five years of good service and is still going strong, especially since I bought it "new shoes" two weeks ago), but recently we decided that a Honda Civic was the best choice for our next vehicle. We looked new, we looked used . . . and we found that the price for the high-end model, still fairly new vehicle was ALMOST IDENTICAL to the brand-new car at the dealership. We would've saved less than $2000 buying used. We intend that this'll be my car for the next five years, then our oldest daughter'll take it to college. It'll be "ours" for a very, very long time. We decided that --in this circumstance -- it made more sense to buy new, get exactly the color and details (airbags everywhere, sunroof, MP3 hookup, and a few other niceties) that I wanted, a 2007 model, and NO mileage. Is this ALWAYS the right choice? I doubt it.

The point is not that buying used is always right, but that you should research these things carefully and explore all your options to see what's the best value for your circumstances.

You're giving your DD the best gift of all...responsibility with her money.

That's absolutely the best gift you can give a child -- the ability to be responsible with her own money in the future. What security and peace of mind it'll give her for the rest of her life.

 

[ducklite]

However, I'll throw out something that makes a world of difference: I grew up a poor kid, and we HAD TO shop at Goodwill, yard sales, etc. It's one thing to buy used when you have a choice; it's miserable to do it because you have no other options.

My parents had seven kids, dad was self-employed and did OK at best for the first ten years after he started the business, mom was forced to go back to work p/t to put food on the table. I got one new outfit a year for the first day of school, otherwise it was hand-me-downs from my older cousins, and were often several years out of style and I was the fourth owner after my three older female cousins had outgrown it all. Even my underwear was hand-me-down until I was around 10.

Then when I was living on my own as a young adult and then a single mom, clothes were the bottom of the list for how to spend my money. When you are spending every dime to feed yourself and put a roof over your head and keep the power on and save three dollars for an emergency fund at the end of each week (which is something I did, because "it could always get worse") there's nothing left for clothes, and I often wore my clothes-horse friends cast-offs.

Now that I can afford to buy clothes and pretty much wear whatever I want, I prefer to buy brand-name/designer clothes. I have two designers I prefer who have moderately priced lines, Eileen Fisher and Ralph Lauren. That said, I buy almost everything on sale at the end of the season--the classic styles they offer are still in style the following year and for many more after taht as well--and they are almost all machine washable and don't need ironing--which is HUGE for me.

I also don't have a ton of clothes. I wear chino's to work M-Th and jeans on Friday, and I've got four pair of chino's and three pair of jeans that are presentable to wear to work. I don't count the 12 year old jeans with holes in the knees that I wear for painting and gardening and such.

That said, I also have clothes from Old Navy and JC Penney. I don't have a single pair of shorts that were bought at full price, most were clearance from one of those two stores. Most of my t-shirts were freebies from record labels and management companies, or tanks from Old Navy bought on sale at the end of the season for $4 each. I've also got a few from outlet shopping--bought a beautiful Tommy Hilfiger long sleeved t a couple weeks ago on sale for $12 plus another 35% off and then 10% mnore off with a coupon I had. I couldn't have bought it at Wal-Mart for that price.

I'd rather buy brand new as a savvy shopper than go to a thrift store. I think Mrs. Pete hit it on the head, it's because I was forced to wear hand-me-downs without regard to my preference for colors and styles until I was in high school, where come to think of it, even my uniforms were second-hand.

And frankly I'm not going to spend the time or money in psychotherapy to get over the aversion.

Anne

 

[ducklite]

Yet another reason to be a saver. Even though he spent only $3-5 per game, 20 games at once was an expensive purchase ($60-100)! If he had been the type who spent every penny within days of getting a paycheck, he wouldn't have been in the position to take advantage of the bargain that day!

I couldn't even find it in myself to give him grief about buying 20 video games in one day given the deal he got. He also bought a half dozen of his favorite movies on DVD for $2-4 each. All were used, but all worked just fine.

Anne

 

[kinntj]

I'll argue with one of those: Cars.
The point is not that buying used is always right, but that you should research these things carefully and explore all your options to see what's the best value for your circumstances.
That's absolutely the best gift you can give a child -- the ability to be responsible with her own money in the future. What security and peace of mind it'll give her for the rest of her life.

I agree on researching the various brands and models. Obviously, Honda and Toyota has greater re-sale value and works out sometimes better getting new. We'll be researching this when my lease is up in a year and 4 months or so. We want to get a minivan and are searching Toyota and Honda models. They are the safest and give you the most for your money. I was researching crossovers, but my dogs have a hard time getting up into mine now due to aging, so we're going to go with the minivan. Just easier on everyone at this stage of our life.

 

[MrsPete]

I'd rather buy brand new as a savvy shopper than go to a thrift store. I think Mrs. Pete hit it on the head, it's because I was forced to wear hand-me-downs without regard to my preference for colors and styles until I was in high school, where come to think of it, even my uniforms were second-hand.

Oh, I have nothing against going to the thrift store (or ebay) -- I just don't want my daughters to grow up WITH NO CHOICES. I had too many pair of jeans that were "just a little too short" and too many shirts that "weren't all that worn out". My mom bought me a prom dress that was "just a little messed up" -- yeah, the neckline was sewn crooked, and I felt self-conscious the whole time I wore it. I was the oldest girl in a largely-male extended family, so I never got ANY hand-me-downs; in fact, I was jealous of my brothers who got things from older male cousins.

Today I try to balance savvy shopping and personal preference. I bought two formals for our upcoming cruise: One was purchased last summer at a yard sale for two dollars -- tags still on it -- and it looks so good on me that it definitely made my husband's eyes pop out. The other I just bought; it was probably meant as a New Year's Eve outfit, and it cost $28 (I'll pay more than that in alterations since I barely skim the bottom edge of 5' tall, and I'm not sure that my sewing skills are adequate for this type of dress), but it's also perfect on me. BUT -- and this is the key thing for me -- I don't HAVE TO shop this way. If I looked around and didn't find anything I liked, I can afford to plunk down $300 for a formal dress. Having that choice makes all the difference in the world.

For everyday clothes, I tend to shop "after the season" -- for example, I'm taking my daughters out today, and I hope to buy myself a couple sweaters and long-sleeved shirts. I won't buy something that I don't really like. Clothes have to be something I like, THEN a good price -- and for most things, doing without until I find what I want is fine with me.

Being short and small is really a blessing when it comes to finding clothes used or marked-down. Things can often be "altered down", whereas a tall person couldn't add more fabric. The one thing I constantly pay full-price for, however, is dress pants. I need the fit of the petites, and they tend to sell out quickly in the stores and are rarely available used. I buy only basic styles and they tend to last me 2-3 years, so I just don't worry about the price. I figure that by skimping on other things (shirts and sweaters are easy), I can afford to buy the good pants that fit. Also, since I"m a teacher and I stand up all day, I buy good quality school shoes -- it makes a world of difference at the end of the day (especially since I park 1/4 a mile from my classroom). I'll buy inexpensive heels for church and going out, but my work shoes MUST be comfortable.

 

[MrsPete]

I couldn't even find it in myself to give him grief about buying 20 video games in one day given the deal he got. He also bought a half dozen of his favorite movies on DVD for $2-4 each. All were used, but all worked just fine.

Anne

I think it's a great deal. If I'd found it, I'd have bought the things for my girls, and I'd have hidden them away to be brought out as an occasional "little treat". We've never had any problem buying used video games and DVDs, though I woudln't buy the system itself used.

 

[ducklite]

I'll argue with one of those: Cars.

I'll agree with you there.

Our last three cars:

1. 2004 Saturn Ion Quade Coupe, 100% financing with -0%- interest and no trade-in. Sold for more than I owed by several thousands last spring. Bottom line was far less expensive than leasing would be, not even taking into account the money I made by keeping mine in the bank. And with no trade-in and because it was a Saturn, there was nothing to mark up or down to get that 0%. AFTER the deal was done, I sold what would have been my trade-in outright to the dealer for an equitable amount (about what I would have gotten for a private party sale) and walked away with a check that I used to buy furniture for my new home.

2. Toyota Prius. Our 50 mpg girl. Due to the demand, a used Prius is only a few thousand less than a brand new one. We were lucky and got our car new about nine months before we expected to, you normally wait up to a year for one. We also got a $2000 tax credit for buying it--wouldn't have gotten that on a used Prius. Paid cash. Interest rates weren't favorable to finance at the time.

3. Saturn Sky. Yeah, this one was a completely needless, financially irresponsible, ridiculous purchase. It's financed. And I just don't care! But I'm still able to pay all of my bills (I'm on schedule to pay off the five year car note in two years) and contribute to my short and long-term savings each month. But I was at a point in my life to be able to make that purchase, it's the first time I've ever been emotionally attached to a car, and I've given up most of my other discretionary spending to be able to have it. Due to the demand and the low numbers being produced, as well as the collectability due to the low VIN# (I'ts a first 1000 car--highly sought after by collectors) I could sell my seven month old car with 7K miles for more than what I paid for it, including the interest I've paid.

More than anything having solid, reliable cars that are under warranty instead of the unknown is worth the depreciation--in our case depreciation has been non-existant or negligable.

Anne

 

[ducklite]

I think it's a great deal. If I'd found it, I'd have bought the things for my girls, and I'd have hidden them away to be brought out as an occasional "little treat". We've never had any problem buying used video games and DVDs, though I woudln't buy the system itself used.

He's got two used systems he bought from friends for $35-40 each when they upgraded to the latest greatest--and each came with 10-20 games. For those prices they are "disposable."

He was also aware of how they had been used/cared for, because he had played on them as much as his friends had.

Anne

 

[kinntj]

Oh, I have nothing against going to the thrift store (or ebay) -- I just don't want my daughters to grow up WITH NO CHOICES.

For everyday clothes, I tend to shop "after the season" --
Being short and small is really a blessing when it comes to finding clothes used or marked-down.

My DD has choices, but while she's young and doesn't care about styles, I can give her used clothes and she doesn't mind. I know I'm up for a bigger battle once she's older and has friends and worries about where her clothes come from. I hope she learns from me that she can mix brands up a bit and nobody will the wiser.

I also like to shop "after the season" for deals for upcoming vacations and such. I don't do this too much otherwise. I just don't like to shop. YUCK! I think shopping for clothes is boring and don't enjoy it much.

Things will be harder to shop for if you have a different body type. I wear the smallest size plus size-14 and those are always sold out when on sale. It irks me to no end.

My DH loves his button up Levi's and don't buy anything else, but he buys them on sale and only when he needs them. His work clothes comes from Mervyn's, Kohl's, and Men's Suit Warehouse (for his meeting day outfits).

 

[Golf4food]

It completely disrespects those of us who conducted ourselves in a responsible manner, and makes people think"why bother." Frankly I'll dump it all in an irrevocable trust and grub like the rest of 'em if it comes down to it. It's not entitlement, it's just equity.

Anne

It's the liberal way...

As a Gen X'er with 40+ years until I retire who is actually saving for my future, I know I could do a heck of a lot better job with the thousands of dollars that are being stolen from me that I will never, ever see in my lifetime for SS. Heck, even if I do nothing more than invest that money in a high yield savings account I could build tens of thousands of dollars to add to my retirement, much less if I invest the money in something with more earnings potential.

 

[tedhowe]

For me, the education on the benefits of time and the power of compounding came from my Dad.

When I started working at a co-op job during college, my Dad gave me an example to model (this was in Excel 1.0 on my Macintosh Plus - the first real electronic spreadsheet I had used

Take a pair of twins - same age same time to retirement.

Twin A puts $2000 per year into an IRA from Age 20 to 29 (10 years) and never puts in another dime.

Twin B puts $2000 per year into an IRA from Age 30 to 65 (36 years).

At age 65, Twin A still has more money in the retirement account than Twin B even though the out-of-pocket amount was so different (only $20,000 invested for Twin A vs. $72,000 invested for Twin B). Of course, the best thing is to do what both Twin A and Twin B do - and invest for all of the 46 years.

That same spreadsheet also was responsbile for me seeing how much difference the last few years of componding make to the total balance of the retirement account grow. That, and the fact that I like to work in the jobs I've been fortunate enough to get, is why I don't even consider 65 or 67 as my target retirement age - 70 is the earliest I'm expecting to retire. I could probably get by at 67, but the difference in available resources can be so great with just a few more years, that if I'm still in good health, I would plan on continuing to work until 70 at least.

 

[disneysteve]

oh, I know you didn't mean me personally. I just knew you guys (selected DISers) were talking about it before and I wanted to start to shop there.

Ok. I wasn't sure if you were being serious or sarcastic (can't tell tone in print). Just wanted to be sure you weren't offended. We love getting jeans at the thrift shops. The prices are great, of course. But more importantly, the selection is huge. DD wears a size 0 or 1 and most stores don't have a whole lot to pick from. And DW wears various sizes depending on the cut and style. Our local Goodwill has 2 full aisles of jeans, each about 15 feet long. You need to devote some time to working through the racks, but it is definitely worth it.

I want them to learn that we're sacrificing a little bit just to have that one big thing.

This is SO important, and relevant to the SS discussion too. We all have a finite amount of money to work with. We need to decide how to divide up that money. If we want to eat out a lot, we might need to cut back on entertainment costs. If we want to go to Disney, we might need to eat out less, etc. And if we want to have a comfortable retirement, we need to live below our means during our working years so that we can invest for our future needs. You just can't have it all.

 

[dvcgirl]

For me, the education on the benefits of time and the power of compounding came from my Dad.

When I started working at a co-op job during college, my Dad gave me an example to model (this was in Excel 1.0 on my Macintosh Plus - the first real electronic spreadsheet I had used

Take a pair of twins - same age same time to retirement.

Twin A puts $2000 per year into an IRA from Age 20 to 29 (10 years) and never puts in another dime.

Twin B puts $2000 per year into an IRA from Age 30 to 65 (36 years).

At age 65, Twin A still has more money in the retirement account than Twin B even though the out-of-pocket amount was so different (only $20,000 invested for Twin A vs. $72,000 invested for Twin B). Of course, the best thing is to do what both Twin A and Twin B do - and invest for all of the 46 years.

I tried this scenario out on my 22 year old male cousin. He's a high school graduate, living at home with a low paying job and can barely scrape together his new truck lease payment. He appeared interested at the time and vowed to begin saving, but hasn't changed his ways. I think so much of it is really learned/observed in the home. My parents were very good financial role models. His parents, his mother in particular....just terrible. It takes a really motivated individual to overcome that....and I'm sure he has the drive to do it.

 

[mickeyfan2]

And DW wears various sizes depending on the cut and style.

Very smart man!!!! You will have a long and happy marriage.