Competitive Salary

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A 7% return is way too optimistic, IMO.

Why I am saving above the minimum of 20%, at 50% >_>; This is not for everyone... 20% of gross salary of a pharmacist saving is quite hard but it will make you wealthy (a multi millionaire when you are 65). 50% saving is VERY HARD next to impossible for a family with 2 kids if you don't gross in the top 5% income bracket.

Equities probably will return around 4%/a year for the next decade. Around 2% real after inflation.

 

[xiphoid2010]

Why I am saving above the minimum of 20%, at 50% >_>; This is not for everyone... 20% of gross salary of a pharmacist saving is quite hard but it will make you wealthy (a multi millionaire when you are 65). 50% saving is VERY HARD next to impossible for a family with 2 kids if you don't gross in the top 5% income bracket.

Equities probably will return around 4%/a year for the next decade. Around 2% real after inflation.

Yeah. The problem with calculating the size of the retirement fund is that people use a % return based on a scenario that the % is constant. However, if the market takes a dump for 3-10 years early on (like what we just went though), it is very hard to catch up because the bulk of that final value depends on money compounded since early on.

This is why I'm planning to follow my parents method, the usual retirement vehicles as basic safety net + realestate as income generating assets. This is a major reason why my wife and I only bought a house that's ~1x our annual income. After we finish paying off student loans, there will be money for second or third investment property.

 

[jblil]

The problem with calculating the size of the retirement fund is that people use a % return based on a scenario that the % is constant.

Exactly. A deterministic model says that the return % is going to be constant year after year, which is not how real life works. A better model is a stochastic one which takes randomness into account. You can search for "Monte-Carlo simulations" and see if there's any free one online. A few years ago financialengines.com offered one, but I don't know if it's still available.

 

[Ackj]

- Some people max out their 401(k) because they have completely written off Social Security. SS is in trouble so benefits might be reduced, but I doubt it will be eliminated altogether. At our income level we contribute the max to SS, so we should get a fairly significant benefit, I'm guessing around $2k/month (today's dollars).

I'm 42 years away from hitting 65. I highly doubt there will be anything left when I get there. Boomers will suck up every last drop. Although, maybe after the boomers all die, we'll recover for a few years and get something.

Honestly, I don't see why we are rewarding people for being old and not saving for their retirement. You chose to live it up and spend every last dime while you worked, and now you're broke and in your late 60s. Taxpayers to the rescue! Don't worry grampa, we'll pay your income for the rest of your life, say maybe 10-40 years.

 

[CuriousPharmD]

I'm 42 years away from hitting 65. I highly doubt there will be anything left when I get there. Boomers will suck up every last drop. Although, maybe after the boomers all die, we'll recover for a few years and get something.

Honestly, I don't see why we are rewarding people for being old and not saving for their retirement. You chose to live it up and spend every last dime while you worked, and now you're broke and in your late 60s. Taxpayers to the rescue! Don't worry grampa, we'll pay your income for the rest of your life, say maybe 10-40 years.

why doesnt SS have an opt out option or privatized yet?? makes the most sense to me....if you decide to contribute you get payed....if you choose not to...you dont....doesnt seem very american that we have no choice if we want to contribute to SS or not?

 

[Dr Wario]

why doesnt SS have an opt out option or privatized yet?? makes the most sense to me....if you decide to contribute you get payed....if you choose not to...you dont....doesnt seem very american that we have no choice if we want to contribute to SS or not?

Because with an opt out, there would never be any way to provide benefits to current recipients. Additionally, were there that option, the people that should be forced to save something for retirement will have nothing because the American people are remarkably stupid when it comes to money management. If that large portion of the population had no money, there would be mass riots for awhile until people again learned how to fend for themselves without big daddy government to do it for them.

 

[xiphoid2010]

why doesnt SS have an opt out option or privatized yet?? makes the most sense to me....if you decide to contribute you get payed....if you choose not to...you dont....doesnt seem very american that we have no choice if we want to contribute to SS or not?

because it's kind of like a Ponzi scheme. Your money is not being banked or invested for your retirement. It is being used to pay for the current retirees, and being diverted by the government to pay for non-SS related government expenses. The moment they allow opt out then the whole scheme would come crashing down.

edit: I see Dr. Wario beat me to the punch. 🙂

 

[Rx MPLS]

I

Honestly, I don't see why we are rewarding people for being old and not saving for their retirement. You chose to live it up and spend every last dime while you worked, and now you're broke and in your late 60s. Taxpayers to the rescue! Don't worry grampa, we'll pay your income for the rest of your life, say maybe 10-40 years.

At the time social security was implemented, older people who could no longer work were often destitute and going hungry. That's not the sort of society I want to live in. I once saw an eighty plus year old man digging through a garbage for food on a ten degree morning, and it was one of the saddest things I've seen. That guy was probably somebody's grandpa.

If you never had a living wage, it's a lot harder to save. If, however, you earned a healthy living your whole life, you should have significant savings upon retirement. Still, societies are rightfully judged by how they treat their members with the least (money, ability to work, mental fitness, etc).

I don't think SS will still be available for me either, but I have time (a key component in growing money) to grow my retirement fund whereas the boomers do not. I'm not about to watch as people try to cut them off as they age when SS was a key part of their retirement plans.

 

[jblil]

I once saw an eighty plus year old man digging through a garbage for food on a ten degree morning, and it was one of the saddest things I've seen. That guy was probably somebody's grandpa.

I agree 1000%. As somebody once said, "The greatness of a society can be judged by how it treats its most vulnerable members."

Work as a volunteer at a food bank, and you'll see there are plenty of people still going hungry these days. When my daughter and I work at the food bank on weekends, I always remind her to be nice to the folks who come to pick up the food - some day, she could be the one on the other side of the counter.

 

[Indypharm]

I agree 1000%. As somebody once said, "The greatness of a society can be judged by how it treats its most vulnerable members."

Work as a volunteer at a food bank, and you'll see there are plenty of people still going hungry these days. When my daughter and I work at the food bank on weekends, I always remind her to be nice to the folks who come to pick up the food - some day, she could be the one on the other side of the counter.

I heard on NPR this morning that 1 in 7 Americans receive some type of food assistance.

 

[Ackj]

I don't think SS will still be available for me either, but I have time (a key component in growing money) to grow my retirement fund whereas the boomers do not. I'm not about to watch as people try to cut them off as they age when SS was a key part of their retirement plans.

People who are retiring now actually have pensions. That's another thing that will not exist when this generation goes on to retire. It's absolutely killing corporations to pay out these large sums for people who have been retired for so many years. I have patients who have drawn pensions from the company longer than they've ever worked there. Tell me how a company can stay solvent doing that? Current retirees have pensions and SS, we will have neither.

 

[Ackj]

I heard on NPR this morning that 1 in 7 Americans receive some type of food assistance.

That seems way too high. Are they doing something like including college meal plans with federal student loans?

 

[jblil]

That seems way too high.

Alas, it is not an overstatement:
http://money.cnn.com/2010/12/21/news/economy/food_stamps/index.htm

 

[Rx MPLS]

People who are retiring now actually have pensions. That's another thing that will not exist when this generation goes on to retire. It's absolutely killing corporations to pay out these large sums for people who have been retired for so many years. I have patients who have drawn pensions from the company longer than they've ever worked there. Tell me how a company can stay solvent doing that? Current retirees have pensions and SS, we will have neither.

Most companies with pension liabilities exceeding their savings and investment earnings are using legal action to discharge them. Many pensions are unlikely to ever be distributed as the money just isn't there.

 

[Rx MPLS]

Most companies with pension liabilities exceeding their savings and investment earnings are using legal action to discharge them. Many pensions are unlikely to ever be distributed as the money just isn't there.

Also, pensions were common for middle class workers and above, not those on the low end of the spectrum.

 

[StevePerry]

i'm 42 years away from hitting 65. I highly doubt there will be anything left when i get there. Boomers will suck up every last drop. Although, maybe after the boomers all die, we'll recover for a few years and get something.

Honestly, i don't see why we are rewarding people for being old and not saving for their retirement. You chose to live it up and spend every last dime while you worked, and now you're broke and in your late 60s. Taxpayers to the rescue! Don't worry grampa, we'll pay your income for the rest of your life, say maybe 10-40 years.

p-o-n-z-i

s-c-h-e-m-e

Edit: Two people beat me to the punch on this one! ::

 

[StevePerry]

I agree 1000%. As somebody once said, "The greatness of a society can be judged by how it treats its most vulnerable members."

Work as a volunteer at a food bank, and you'll see there are plenty of people still going hungry these days. When my daughter and I work at the food bank on weekends, I always remind her to be nice to the folks who come to pick up the food - some day, she could be the one on the other side of the counter.

That's the way it should be -- people volunteering to help out their fellow man, not some bull**** goverment entity stealing from its citizens and further encouraging irresponsible behavior. Kudos to you for helping out.

 

[Rx MPLS]

That's the way it should be -- people volunteering to help out their fellow man, not some bull**** goverment entity stealing from its citizens and further encouraging irresponsible behavior. Kudos to you for helping out.

People should definitely volunteer, but the people who seem to make similar statements often don't on any regular basis. Do you?

 

[Ackj]

People should definitely volunteer, but the people who seem to make similar statements often don't on any regular basis. Do you?

If I wasn't already forced into it, I'd have some money available to donate. Alas, it is stolen from me before it ever hits my paycheck. If I could pay to speed up the construction down the street from me, you bet I would.

 

[Rx MPLS]

If I could pay to speed up the construction down the street from me, you bet I would.

Paying for something that directly benefits you isn't exactly altruistic. I have no comment for the rest of the post, except that it sounds like a familiar refrain and I'm pretty sure we fundamentally disagree on this issue. To those whom much has been given, much is required.

 

[StevePerry]

People should definitely volunteer, but the people who seem to make similar statements often don't on any regular basis. Do you?

I personally do. The reason that a large portion of other people that make similar statements don't follow through with things of the nature is because they are already dumping quite a bit of money into the system that they don't agree with at all that enables other people's reckless behavior (moral hazard argument).

And before you respond, you know many of these people will not get back from the system what they put into it over the years, so the money paid into the system is not purely "self-serving"

 

[Rx MPLS]

I personally do. The reason that a large portion of other people that make similar statements don't follow through with things of the nature is because they are already dumping quite a bit of money into the system that they don't agree with at all that enables other people's reckless behavior (moral hazard argument).

And before you respond, you know many of these people will not get back from the system what they put into it over the years, so the money paid into the system is not purely "self-serving"

That's an interesting way of looking at it. I don't agree, but I guess I can understand, though I think we approach this from two different angles completely. This got a bit long, but maybe you can clarify some things for me and I'll try to explain my views on the situation.

Realistically, if you are a pharmacist, a lot of people helped you along the way. Especially if you went to any public schools. There was already a large investment in your education by the government and society as a whole. A lot of people like to think they did it all on their own and "pulled themselves up by their bootstraps", but with the way society works, but isn't really possible.

Moreover, while there is a lot of work involved in becoming a pharmacist, the mental fitness required is not something that everybody can obtain. Both genetically and societally, you are blessed if you are a pharmacist.

While I do agree that enabling reckless behavior is a poor outcome, there are also people out there who never had a chance to begin with. People are born every day with disabling diseases through no fault of their own, low IQs that prevent them from any kind of work that pays a living wage, parents who abuse drugs, alcohol and their children, et cetera.

I don't mind paying taxes to help support people with these problems, and I assume you don't either. Would this be correct? Is the problem simply that you don't like some "entitlement" (this word sounds very partisan to me) programs, so you'd rather not have any of them and just hope that people do the right thing to help others out? You would rather have us keep our own scorecards as to what we think society gave us versus what we think we have given to society, then only give back when our credits exceed our debits?

 

[sisson329]

Wow this has been realy helpful guys, I clearly have a lot to understand when it comes to dealing with retirement options but I'll definitely start looking into it soon. Luckily my cousin happens to be a managerial account in Sacramento and I've agreed to basically just hand him my money and let him do what he does best. The guy is a money genius when it comes to these things. BUT, getting overall net pay is looking about what I was expecting and I think what Xiphoid said about investing makes a lot of sense to me. It seems like a great route. Be grateful that you had intelligent parents! I grew up in a trailer park and my Dad was a hard laborer but they just never had smarts, and I've always had to seek my own information elsewhere.

Thanks again guys! 🙂

 

[StevePerry]

That's an interesting way of looking at it. I don't agree, but I guess I can understand, though I think we approach this from two different angles completely. This got a bit long, but maybe you can clarify some things for me and I'll try to explain my views on the situation.

Realistically, if you are a pharmacist, a lot of people helped you along the way. Especially if you went to any public schools. There was already a large investment in your education by the government and society as a whole. A lot of people like to think they did it all on their own and "pulled themselves up by their bootstraps", but with the way society works, but isn't really possible.

Moreover, while there is a lot of work involved in becoming a pharmacist, the mental fitness required is not something that everybody can obtain. Both genetically and societally, you are blessed if you are a pharmacist.

While I do agree that enabling reckless behavior is a poor outcome, there are also people out there who never had a chance to begin with. People are born every day with disabling diseases through no fault of their own, low IQs that prevent them from any kind of work that pays a living wage, parents who abuse drugs, alcohol and their children, et cetera.

I don't mind paying taxes to help support people with these problems, and I assume you don't either. Would this be correct? Is the problem simply that you don't like some "entitlement" (this word sounds very partisan to me) programs, so you'd rather not have any of them and just hope that people do the right thing to help others out? You would rather have us keep our own scorecards as to what we think society gave us versus what we think we have given to society, then only give back when our credits exceed our debits?

I get your drift for sure, and honestly I understand where you're coming from. Some points to clarify on my end though...

I don't believe in the scorecard theory per se, I just don't think the government and their "entitlement programs" are the best vehicles to achieve success in these areas. Entitlement programs bring moral hazard -- I think when this care and financing was done at a local level, sans the government, you had stronger families and communities that have since eroded, with of course no moral hazard. What was social security back in the day? Move back in with your kids, let the church or charitable organizations take care of the other people. It has gotten out of hand -- look at the Mexican invasion into this country to feed off of our entitlement programs (which could also be ended if we would just end naturalization through birth for illegal immigrants like virtually the rest of the world -- something that helped make our country great, but also something that could help destroy it...). It is definitely more of a conundrum at this point as people have become dependent on the system than it would have been if these programs had not been enacted in the first place. You'd have to find a way to phase them out gradually...

One valid point I will give you, and of course where it gets really tricky b/c of all the worthless parents out there, is with education and providing for the children. I think if the government wants to step in one area, giving the kids a chance to be successful in life is a good one...

 

[Rx MPLS]

Wow this has been realy helpful guys, I clearly have a lot to understand when it comes to dealing with retirement options but I'll definitely start looking into it soon. Luckily my cousin happens to be a managerial account in Sacramento and I've agreed to basically just hand him my money and let him do what he does best. The guy is a money genius when it comes to these things. BUT, getting overall net pay is looking about what I was expecting and I think what Xiphoid said about investing makes a lot of sense to me. It seems like a great route. Be grateful that you had intelligent parents! I grew up in a trailer park and my Dad was a hard laborer but they just never had smarts, and I've always had to seek my own information elsewhere.

Thanks again guys! 🙂

You've come a long way from the trailer park. Nice work.

Just because cautious of anybody who might be a "money genius", even if they are your cousin. Bernie Madoff was also a money genius. Try to learn a little bit about investing on your own, when you find the time. It's definitely worth it, and should help keep you from getting burnt.