MarketWatch: Many young people shouldn’t save for retirement

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MarketWatch: Many young people shouldn’t save for retirement

Post by AnnetteLouisan »

[Moved into a new thread from: In Retirement, You May Not Need to Spend So Much --admin LadyGeek]

MarketWatch has a piece today, the gist of which is that you don’t need to save until you are older. Not sure if it’s a similar argument to what is in the NYT article but it’s quite regrettable.

I’m sure it’s what many people prefer to hear, especially these days with inflation so high, but it’s very far from the truth. I could tell you stories about people I know who didn’t save regularly and consistently throughout their working lives but I don’t want to engage in poverty porn. Suffice it to say, their situations are bleak.
Last edited by AnnetteLouisan on Sat Oct 01, 2022 11:49 am, edited 1 time in total.
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Re: In Retirement, You May Not Need to Spend So Much

Post by JoeRetire »

AnnetteLouisan wrote: Sat Oct 01, 2022 6:31 am MarketWatch has a piece today quoting a purported Nobel Laureate named Robert Powell. The gist of the piece is that you don’t need to save until you are older.
https://www.marketwatch.com/story/many- ... 1664562570

It's a bit more nuanced than that. Some good points, some silly points, IMHO.
Not sure if it’s a similar argument to what is in the NYT article
It's not really the same thing. It focused more on "optimal spending" throughout your life, than "spending less in retirement".

The concept is to smooth out your lifestyle by spending more (and saving less) when you are young and when you are old, and spending less (and saving more) in the middle years when income is highest.
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Re: In Retirement, You May Not Need to Spend So Much

Post by AnnetteLouisan »

JoeRetire wrote: Sat Oct 01, 2022 6:58 am
AnnetteLouisan wrote: Sat Oct 01, 2022 6:31 am MarketWatch has a piece today quoting a purported Nobel Laureate named Robert Powell. The gist of the piece is that you don’t need to save until you are older.
https://www.marketwatch.com/story/many- ... 1664562570

It's a bit more nuanced than that. Some good points, some silly points, IMHO.
Not sure if it’s a similar argument to what is in the NYT article
It's not really the same thing. It focused more on "optimal spending" throughout your life, than "spending less in retirement".

The concept is to smooth out your lifestyle by spending more (and saving less) when you are young and when you are old, and spending less (and saving more) in the middle years when income is highest.
I have a theory that says you should spend more in crappy times (illness, unemployment, bummer situation of whatever kind) than when things are going well for you, because you need it more in bad times. So in my view it isn’t age related. Sometimes you need a little extra being good to yourself and sometimes you don’t.
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The dumbest article ever written [Marketwatch: Don't Save for Retirement]

Post by 5280Tim »

[Thread merged into here --admin LadyGeek]

https://www.marketwatch.com/story/many- ... 1664562570

I can’t believe this was published.
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Re: The dumbest article ever written

Post by AnnetteLouisan »

5280Tim wrote: Sat Oct 01, 2022 9:24 am https://www.marketwatch.com/story/many- ... 1664562570

I can’t believe this was published.
There’s a discussion of this on a nearby thread. Maybe the mods would merge the threads.

And in its defense, it isn’t the dumbest. That title is already held in perpetuity (no more entries being accepted) by one written around 2011 by a woman who was proud to tell how she overcame her doubts and gave half her home, that she had worked hard to buy and pay off the mortgage and now owned free and clear, as JTWROS to a man she wasn’t married to, had recently met and who moved in but wasn’t contributing to expenses, in her late 40s because she felt that doing so helped her overcome emotional barriers to the relationship, after her divorce. Wonder if she is still alive to tell what happened. It was either in Real Simple magazine (no pun intended) or Womens Day (dentists office pre Covid).

As for this article, I can’t imagine how one would build wealth without building that all important foundation. And that starts with implementing good habits early (notes the hypocritical reformed overspender who recently made a yolo argument on a nearby thread. But in my defense I both overspent and built a base with good saving habits. Go figure).
Last edited by AnnetteLouisan on Sat Oct 01, 2022 10:43 am, edited 10 times in total.
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Re: The dumbest article ever written

Post by Trance »

I can't even begin to deconstruct how many times this article contradicts itself. Holy cow
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Re: The dumbest article ever written

Post by Californiastate »

How is this actionable?
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Re: The dumbest article ever written

Post by forwhatiknow »

If those who subscribe to Marketwatch I'll bet it was the first item to be clicked on this morning. Its click bait factor for the BH type is
high.
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Re: The dumbest article ever written

Post by DesertDiva »

Californiastate wrote: Sat Oct 01, 2022 9:39 am How is this actionable?
It is actionable: it’s another reminder of why we should avoid MarketWatch articles.
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Re: The dumbest article ever written

Post by Robot Monster »

Let's all click the link so that article gets lots of views.
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Re: The dumbest article ever written

Post by JoMoney »

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Re: The dumbest article ever written

Post by galawdawg »

Robot Monster wrote: Sat Oct 01, 2022 9:47 am Let's all click the link so that article gets lots of views.
Yep. This thread is nothing but click-bait. Titled "The dumbest article ever written" with a naked link to an external website.
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Re: The dumbest article ever written

Post by zaboomafoozarg »

Robot Monster wrote: Sat Oct 01, 2022 9:47 am Let's all click the link so that article gets lots of views.
They even cite Bogleheads.org for the graph in that article.
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Re: The dumbest article ever written

Post by JoMoney »

galawdawg wrote: Sat Oct 01, 2022 9:54 am
Robot Monster wrote: Sat Oct 01, 2022 9:47 am Let's all click the link so that article gets lots of views.
Yep. This thread is nothing but click-bait. Titled "The dumbest article ever written" with a naked link to an external website.
:thumbsup
I don't mind a sensational subject title/headline, but posting links without any context of what you're linking to is a bit lazy, disrespectful, and "dumb"
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Re: The dumbest article ever written

Post by random_walker_77 »

I think this is a case where an academic theory leads to a poor strategy if you adjust for risk and human psychology. It's not the first time that academic theory and practical reality differ.

I don't like that the graph in the article references bogleheads as a source. Something about it almost borders on an implied endorsement.
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Re: The dumbest article ever written

Post by Wanderingwheelz »

There is a very good point made towards the end of the article, which is in effect we need to save more when we have higher incomes later in life so that we can spend more of our lower income when we are younger. Being free of a mortgage is one example of how this works. Once the mortgage is retired, does one spend more on vacations and such? Or does one invest the new-found cash flow?

One really hopeful take-away from the article is that having a satisfying retirement isn’t predicated on having made tax-deferred retirement contributions in one’s 20s and 30s. The trick is to save a lot during one’s peak earning years.
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Re: The dumbest article ever written

Post by Florida Orange »

Kind of a wild thought but do you think maybe the financial press is just looking to attract eyeballs?
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Re: The dumbest article ever written

Post by riverant »

random_walker_77 wrote: Sat Oct 01, 2022 9:58 am I think this is a case where an academic theory leads to a poor strategy if you adjust for risk and human psychology. It's not the first time that academic theory and practical reality differ.

I don't like that the graph in the article references bogleheads as a source. Something about it almost borders on an implied endorsement.
Academics tend to often assume there is a massive concentration of people that match the average they calculate in Excel. “Value maximizing”, even under their dubious definition of value is much different from value certainty, particularly when one’s peak income is unknown in both amount and time period. It also overlooks the fact that expenses often are binomial, peaking at middle age and end of life. Might be hard to make up for a lifetime of not saving when you’re paying for two kids in college.
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Re: The dumbest article ever written

Post by bobcat2 »

I think the article makes sense for a lot of people including most college graduates. If people age 30 or younger are going to save it makes more sense to save for a house down payment than for retirement that's 35-40 years away. I see no reason for people that young to save more for retirement than the company match.

I remember reading that the great economist Milton Friedman would advise young colleagues at the University of Chicago to avoid saving too much at an early age.

BTW my wife and I are financially doing well in retirement and neither of us began saving for retirement until we were in our early 30s. I think we were implicitly following the life-cycle model without explicitly being aware of it. :happy

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Re: The dumbest article ever written

Post by 5280Tim »

galawdawg wrote: Sat Oct 01, 2022 9:54 am
Robot Monster wrote: Sat Oct 01, 2022 9:47 am Let's all click the link so that article gets lots of views.
Yep. This thread is nothing but click-bait. Titled "The dumbest article ever written" with a naked link to an external website.
Sorry for not including more content in the original post. I just couldn’t believe what I was reading… discouraging people from saving early! It completely ignores the reality of human behavior.

Thanks for editing the title.
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Re: The dumbest article ever written [Marketwatch: Don't Save for Retirement]

Post by RJC »

You have to at least get the company match, even in your early saving years.
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Re: The dumbest article ever written

Post by Dottie57 »

Wanderingwheelz wrote: Sat Oct 01, 2022 10:08 am There is a very good point made towards the end of the article, which is in effect we need to save more when we have higher incomes later in life so that we can spend more of our lower income when we are younger. Being free of a mortgage is one example of how this works. Once the mortgage is retired, does one spend more on vacations and such? Or does one invest the new-found cash flow?

One really hopeful take-away from the article is that having a satisfying retirement isn’t predicated on having made tax-deferred retirement contributions in one’s 20s and 30s. The trick is to save a lot during one’s peak earning years.
Saving when you are young starts you on building the habit of saving. You may not be saving much i. 20’s but the habit is good.

My first decade I was the lowest paid employee in the 30+ Ompany ( I printed payroll checks). Yet in the decade I saved 115k. Not much by this groups standards but lots mor than I would have without 401k. That money grew for 30+ years.

It is worthwhile to learn to live on less and contribute to 401k. The habits are what is important so that you do the same as income increases.
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Re: The dumbest article ever written

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5280Tim wrote: Sat Oct 01, 2022 10:18 am I just couldn’t believe what I was reading… discouraging people from saving early!
The article isn't discouraging young people from saving. It's saying young people should direct savings for home purchase down payment rather than for a retirement that's many decades away. From the article -
...you are doing your best at age 25 with $25,000, and there is no way to live ‘cheaply’ and do better,” he said. “We also assume a given amount of money is more valuable to you when you are poor compared to when you are wealthy.” (Meaning $1,000 means a lot more at 25 than at 45.)

Scott also said that young workers might also consider securing a mortgage to buy a house rather than save for retirement. The reasons? You’re borrowing against future earnings to help that consumption, plus, you’re building equity that could be used to fund future consumption, he said.
And
There are plenty of questions the research raises. For instance, many experts say it’s a good idea to get in the habit of saving, to pay yourself first. Scott doesn’t disagree. For instance, a person might save to build an emergency fund or a down payment on a house.
The headline of the article has it right, but both of the titles of this thread are dumb. Here's the article's title, Many young people shouldn’t save for retirement.

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Re: The dumbest article ever written [Marketwatch: Don't Save for Retirement]

Post by whodidntante »

I don't think it's dumb. It challenged your deeply held beliefs and you chose to reject the ideas. That's pretty typical when someone has deeply held beliefs. Probably the article wasn't targeting you. It can be "dumb" since you used that word to deprive your family of deeply needed resources so you can be rich when you are old and frail. That's one reason I sometimes tell people they do not have an investing problem, they have an income problem.

I am a bigger fan of the strategy outlined in the book "Lifecycle Investing" for these whippersnappers, though. It's a sensible way to address their capital limitations and achieve diversification across time. The main disadvantage of that strategy right now is that valuations are still high, and cost of leverage has increased greatly. It's possible that both of these things could change "favorably" in the near future, though. I am certainly better off from my use of leverage, and it's not even close enough to warrant debate.
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Re: In Retirement, You May Not Need to Spend So Much

Post by bobcat2 »

AnnetteLouisan wrote: Sat Oct 01, 2022 6:31 am MarketWatch has a piece today quoting a purported Nobel Laureate named Robert Powell.
Robert Powell is an economic and financial journalist. I have no idea why you think he is a Nobel prize winner. :oops:

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Re: In Retirement, You May Not Need to Spend So Much

Post by LadyGeek »

I merged 5280Tim's thread into the ongoing discussion.

The MarketWatch article is using my chart from the wiki: Life-cycle finance 8-)

Note the credit to bogleheads.org. Thanks, MarketWatch! Why? No royalties. The content is per the GNU Free Documentation License. :)
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Re: In Retirement, You May Not Need to Spend So Much

Post by bobcat2 »

I don't understand why these two threads have been merged. One thread is about spending less when old. The other is about saving less when young. These are different topics. :oops:

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Re: In Retirement, You May Not Need to Spend So Much

Post by CyclingDuo »

bobcat2 wrote: Sat Oct 01, 2022 10:59 am I don't understand why these two threads have been merged. One thread is about spending less when old. The other is about saving less when young. These are different topics. :oops:

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I guess if one saves less when they are young they are bound to spend less when old due to a smaller nest egg. :mrgreen:
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Re: In Retirement, You May Not Need to Spend So Much

Post by bobcat2 »

So now this thread is discussing 3 articles on 3 different topics.
CyclingDuo wrote: Sat Oct 01, 2022 11:00 am - In Retirement, You May Not Need to Spend So Much by Peter Coy (September 28, 2022)

- Retirement May Be Even More Expensive Than You Think by Paul Brown (July 13, 2014)

CyclingDuo
and from MarketWatch - Many young people shouldn’t save for retirement

I nominate this thread as the most confused Bogleheads thread ever. :D

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Re: The dumbest article ever written

Post by Wanderingwheelz »

Dottie57 wrote: Sat Oct 01, 2022 10:21 am
Wanderingwheelz wrote: Sat Oct 01, 2022 10:08 am There is a very good point made towards the end of the article, which is in effect we need to save more when we have higher incomes later in life so that we can spend more of our lower income when we are younger. Being free of a mortgage is one example of how this works. Once the mortgage is retired, does one spend more on vacations and such? Or does one invest the new-found cash flow?

One really hopeful take-away from the article is that having a satisfying retirement isn’t predicated on having made tax-deferred retirement contributions in one’s 20s and 30s. The trick is to save a lot during one’s peak earning years.
Saving when you are young starts you on building the habit of saving. You may not be saving much i. 20’s but the habit is good.

My first decade I was the lowest paid employee in the 30+ Ompany ( I printed payroll checks). Yet in the decade I saved 115k. Not much by this groups standards but lots mor than I would have without 401k. That money grew for 30+ years.

It is worthwhile to learn to live on less and contribute to 401k. The habits are what is important so that you do the same as income increases.
I didn’t say not to save when you’re young. I sure did. I said that it’s more important to save a lot when you’re in the peak earning years. I know not everyone can do this, obviously, but the savings we’ve put away in the years from age 35 to 50 should be plenty to keep our living standards in tact through retirement. It’s hard to believe, but as little as 6 or 7 years of aggressive saving when earning are at peak is often enough to secure a solid retirement. I started an IRA with $2,000 in contributions for a string of years when I was young. Through the years, including some not-the-best investment choices it’s now about $50,000. Our retirement deposits from earning income this year alone, will be @ 6x that amount.

Getting a late start isn’t the end of the world. If you want to build wealth, the heavy lifting normally is done through earned income, not compounding- no matter how early one starts.
Being wrong compounds forever.
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Re: In Retirement, You May Not Need to Spend So Much

Post by AnnetteLouisan »

Maybe this is where someone can explain to me the popular saying among young people today, “build the life you want, then save for it.” (Huh?)

Meantime Ramit Sethi, who has many good points and whose podcast I love but often disagree with, is telling impressionable folks to overtip, spend more, quit their jobs and rent. Specifically he tells them to imagine your rich life, and even get specific about fantasy spending in his new IWT Journal available on Amazon. And he says their parents who tell them to cut back and buy a home are woefully out of touch. It’s a popular message. I can’t look away though!
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Nobel Prize-winning Theory says Don't Save for Retirement

Post by tvubpwcisla »

[Thread merged into here --admin LadyGeek]

New research based on the lifecycle model says that people should instead stive for a consistent standard of living through their lives.

https://www.marketwatch.com/story/many- ... 1664562570
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Re: In Retirement, You May Not Need to Spend So Much

Post by LadyGeek »

bobcat2 wrote: Sat Oct 01, 2022 10:59 am I don't understand why these two threads have been merged. One thread is about spending less when old. The other is about saving less when young. These are different topics. :oops:

BobK
I was due to the the MarketWatch article being mentioned in the first thread. Sorry about that. The threads have been split (un-merged) with posts mentioning the MarketWatch article now in this thread.
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Re: Nobel Prize-winning Theory says Don't Save for Retirement

Post by livesoft »

tvubpwcisla wrote: Sat Oct 01, 2022 11:47 am New research based on the lifecycle model says that people should instead stive for a consistent standard of living through their lives.
LOL! If I was still living consistently like the grad student that I was then sure it makes total sense. I was probably making more money though than the author of this article is making now. :twisted:
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Re: The dumbest article ever written

Post by JackoC »

Wanderingwheelz wrote: Sat Oct 01, 2022 10:08 am There is a very good point made towards the end of the article, which is in effect we need to save more when we have higher incomes later in life so that we can spend more of our lower income when we are younger. Being free of a mortgage is one example of how this works. Once the mortgage is retired, does one spend more on vacations and such? Or does one invest the new-found cash flow?

One really hopeful take-away from the article is that having a satisfying retirement isn’t predicated on having made tax-deferred retirement contributions in one’s 20s and 30s. The trick is to save a lot during one’s peak earning years.
I agree with that though don't disagree with all the responses to you either. In rational $'s/cents it's unusual for savings in early years to make a big difference where you end up financially. Another aspect is that the time/value 'space' has a different shape depending on return assumption. Simplistic articles about investing often assume the expected return is the historical, for stocks say 6-7% but that's clearly optimistic now IMO (though not as optimistic as it was before the recent market downturn). At a more realistic say 4% real pre tax on stocks, savings when you're just starting out at well below your peak earning are even less important to retirement.

*In rational $/cents terms*. But in elementary personal finance, the psychological is very important too and there are obvious issues with getting in the habit of making a decent income but saving nothing.

Though also as BobK noted it might not be fair to interpret the actual article as saying young people shouldn't save. For people below a certain age, intermediate savings requirements might be more important than retirement savings; saving for further education, household set up, house down payment, to buy next car for cash and perhaps most important to weather a period of unemployment. The key and common exception is if an employer retirement plan matches your savings. Leaving that money on the table to consume or even save elsewhere is almost never justified IMO, and even falling below the max allowable contribution for tax deferral (though depends what % or your income that $ amount is) requires careful thought. But I don't believe people should save a necessarily constant % of income, though don't believe a constant standard of living your whole life makes much sense either (that would seem to assume a fairly dead end job for one thing). If not in a dead end job, I think you'd generally expect to increase both your material standard of living and % of income saved from some point in your 30's.
Last edited by JackoC on Sat Oct 01, 2022 11:55 am, edited 1 time in total.
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Re: MarketWatch: Many young people shouldn’t save for retirement

Post by LadyGeek »

I merged tvubpwcisla's thread into the ongoing discussion.

(Thanks to the member who reported the post and provided a link to this thread.)
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Re: The dumbest article ever written

Post by bobcat2 »

Wanderingwheelz wrote: Sat Oct 01, 2022 11:42 amI didn’t say not to save when you’re young. I sure did. I said that it’s more important to save a lot when you’re in the peak earning years. I know not everyone can do this, obviously, but the savings we’ve put away in the years from age 35 to 50 should be plenty to keep our living standards in tact through retirement. It’s hard to believe, but as little as 6 or 7 years of aggressive saving when earning are at peak is often enough to secure a solid retirement. I started an IRA with $2,000 in contributions for a string of years when I was young. Through the years, including some not-the-best investment choices it’s now about $50,000. Our retirement deposits from earning income this year alone, will be @ 6x that amount.

Getting a late start isn’t the end of the world. If you want to build wealth, the heavy lifting normally is done through earned income, not compounding- no matter how early one starts.
Yes. Very early in your working career you will probably need to take on some debt for simple things like furniture and a car. At the same time you need to build an emergency fund for possible unemployment or poor health. Next you need to start trimming debt, both that earlier consumer debt & student loan debt and you also need to begin saving for a home down payment. Retirement saving comes after those goals have been met. If you have the home at age 30 with a 30 year mortgage you are on your way to a good retirement.

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Re: Nobel Prize-winning Theory says Don't Save for Retirement

Post by zaboomafoozarg »

tvubpwcisla wrote: Sat Oct 01, 2022 11:47 amNew research based on the lifecycle model says that people should instead stive for a consistent standard of living through their lives.
I've been working for 15 years and still live like a college student with a $25k income.

Even when I retire early I think it's going to be hard to kick the habit.
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Re: MarketWatch: Many young people shouldn’t save for retirement

Post by Gryphon »

I see two problems with this. First, they're making the assumption that inflation-adjusted income will increase significantly by middle age and it doesn't work out that way for everyone. Second, people who don't get in the habit of saving for retirement when they're young, but instead get in the habit of spend, SPEND, SPEND, aren't likely to change horses 20 years later and suddenly start living below their means.

So I think it's something that looks good on paper but doesn't take human behaviour into account.
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Re: In Retirement, You May Not Need to Spend So Much

Post by whodidntante »

LadyGeek wrote: Sat Oct 01, 2022 10:56 am I merged 5280Tim's thread into the ongoing discussion.

The MarketWatch article is using my chart from the wiki: Life-cycle finance 8-)

Note the credit to bogleheads.org. Thanks, MarketWatch! Why? No royalties. The content is per the GNU Free Documentation License. :)
That's pretty cool!
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Re: MarketWatch: Many young people shouldn’t save for retirement

Post by AnnetteLouisan »

Gryphon wrote: Sat Oct 01, 2022 11:56 am I see two problems with this. First, they're making the assumption that inflation-adjusted income will increase significantly by middle age and it doesn't work out that way for everyone. Second, people who don't get in the habit of saving for retirement when they're young, but instead get in the habit of spend, SPEND, SPEND, aren't likely to change horses 20 years later and suddenly start living below their means.

So I think it's something that looks good on paper but doesn't take human behaviour into account.
The latest Ramit Sethi podcast may interest you. Free hair curling! Couple in extreme debt won’t have the wife get a job, sell their new cars or their big home and they want to take out a $350k business loan secured by their home. Ramit, whose patience is near its end, voices disapproval.
Last edited by AnnetteLouisan on Sat Oct 01, 2022 12:03 pm, edited 1 time in total.
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Re: In Retirement, You May Not Need to Spend So Much

Post by whodidntante »

bobcat2 wrote: Sat Oct 01, 2022 11:32 am So now this thread is discussing 3 articles on 3 different topics.
CyclingDuo wrote: Sat Oct 01, 2022 11:00 am - In Retirement, You May Not Need to Spend So Much by Peter Coy (September 28, 2022)

- Retirement May Be Even More Expensive Than You Think by Paul Brown (July 13, 2014)

CyclingDuo
and from MarketWatch - Many young people shouldn’t save for retirement

I nominate this thread as the most confused Bogleheads thread ever. :D

BobK
Ha! Now that's a ranking I would like to see. Bogleheads gone wild.
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Re: The dumbest article ever written

Post by climber2020 »

bobcat2 wrote: Sat Oct 01, 2022 11:55 am you also need to begin saving for a home down payment. Retirement saving comes after those goals have been met. If you have the home at age 30 with a 30 year mortgage you are on your way to a good retirement.
Why the emphasis on buying a house? When I was 30, my priority was to be light and mobile in case a better job opportunity came up and I had to move on short notice. This is especially important for a single person; someone that age shouldn't want to intentionally ball and chain themselves to a piece of property when the primary financial goal is to maximize one's income potential.
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Re: In Retirement, You May Not Need to Spend So Much

Post by JS-Elcano »

AnnetteLouisan wrote: Sat Oct 01, 2022 11:45 am Maybe this is where someone can explain to me the popular saying among young people today, “build the life you want, then save for it.” (Huh?)

Meantime Ramit Sethi, who has many good points and whose podcast I love but often disagree with, is telling impressionable folks to overtip, spend more, quit their jobs and rent. Specifically he tells them to imagine your rich life, and even get specific about fantasy spending in his new IWT Journal available on Amazon. And he says their parents who tell them to cut back and buy a home are woefully out of touch. It’s a popular message. I can’t look away though!
As for the saying in bold, I think it means that they want/should focus on what they want their life to look like, what gives it purpose, meaning, dare I say, happiness INSTEAD of choosing their life's path/college major, career based on how they can make the most money the fastest and focus on saving (and then hitting a midlife crisis or worse when they realize what they've done was mostly meaningless). Unlike those who came before them who became lawyers, doctors, or went into IT careers because of the money not because they were drawn to those professions for other reasons and forewent experiences, including with their children, to work and save more. Of course, as always when the pendulum swings to the other extreme, the best way is somewhere in the middle.
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Re: In Retirement, You May Not Need to Spend So Much

Post by whodidntante »

AnnetteLouisan wrote: Sat Oct 01, 2022 11:45 am Maybe this is where someone can explain to me the popular saying among young people today, “build the life you want, then save for it.” (Huh?)

Meantime Ramit Sethi, who has many good points and whose podcast I love but often disagree with, is telling impressionable folks to overtip, spend more, quit their jobs and rent. Specifically he tells them to imagine your rich life, and even get specific about fantasy spending in his new IWT Journal available on Amazon. And he says their parents who tell them to cut back and buy a home are woefully out of touch. It’s a popular message. I can’t look away though!
I like really weird points of view that are articulated well and attach to some kind of understandable worldview. It's not that I necessarily come around to what the person is saying, but I think it's good for one's growth to process different points of view.
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Re: MarketWatch: Many young people shouldn’t save for retirement

Post by JackoC »

Gryphon wrote: Sat Oct 01, 2022 11:56 am I see two problems with this. First, they're making the assumption that inflation-adjusted income will increase significantly by middle age and it doesn't work out that way for everyone. Second, people who don't get in the habit of saving for retirement when they're young, but instead get in the habit of spend, SPEND, SPEND, aren't likely to change horses 20 years later and suddenly start living below their means.

So I think it's something that looks good on paper but doesn't take human behaviour into account.
I agree about the forming of good habits. I doubt anyone really disagrees with this, not sure even the article writer actually does. Again younger people often have important things to save for, relative to their means, *besides* retirement (as mentioned in various posts, student debt, debt on first car plus save to buy next one with cash, house down payment etc). So it can make a difference if the topic is any savings or retirement savings. But yeah, getting in the habit of spending all your money even before you have it is highly deleterious to long term financial security, no doubt about that.

But on an increase in income not panning out for some people, true, but I think sometimes conventional elementary personal finance advice, on this forum too sometimes, can underestimate the importance of growing your income. There isn't hasn't ever been nor will ever be a guarantee that focus and hard work will yield higher income. But lack of either one largely guarantees it won't happen, except in fluke cases. And income is extremely important to financial success, not the only thing but a very big thing. Maybe that's all 100% obvious and that's why it seems income growth is underemphasized sometimes, but it does seem so to me.
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Re: MarketWatch: Many young people shouldn’t save for retirement

Post by z3r0c00l »

I could see not saving much until 30 except for a solid emergency fund. Why not use your youth to enjoy life and travel? I work with many older people, a solid number of them save millions that they never get to use due to early illness. They regret not doing more when they were young and healthy, and the money is useless to them. 1 in 10 men won't see 55, one in five won't live to see the common retirement age of 65.
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Re: MarketWatch: Many young people shouldn’t save for retirement

Post by jabberwockOG »

AnnetteLouisan wrote: Sat Oct 01, 2022 6:31 am [Moved into a new thread from: In Retirement, You May Not Need to Spend So Much --admin LadyGeek]

MarketWatch has a piece today, the gist of which is that you don’t need to save until you are older. Not sure if it’s a similar argument to what is in the NYT article but it’s quite regrettable.

I’m sure it’s what many people prefer to hear, especially these days with inflation so high, but it’s very far from the truth. I could tell you stories about people I know who didn’t save regularly and consistently throughout their working lives but I don’t want to engage in poverty porn. Suffice it to say, their situations are bleak.
100% agree.

I saved and invested 10-15% of my income for 38 years. In no way was doing that a hardship.

This steady non stop saving and investment eventually resulted in our 401k being more than enough to retire 6 years early, and to also delay SS until 70. Because we started early and had the discipline to stay the course, there was no need to live in poverty, or to deny ourselves (or our kids) any reasonable "luxuries" when we were younger. We lived in nice neighborhoods and nice houses (always fixers), drove nice cars (often buying low mile used), regularly took nice vacations, etc.

In retirement we have plenty of disposable income but are quite happy to lead pretty simple lives. We travel;led a lot in the past for work. Travel today has little appeal given the hassle factor, crowds, and the absurd costs involved these days.

By contrast I have multiple life long friends that somehow never managed to find a way to save, or conversely always managed to find a need to spend every dime they earned, they never seemed to be able to get out of debt, never paid off mortgage, etc. - the usual all too familiar consumer story in America. Most are in their late 60's now and still working, or financial struggling - I doubt their fond memories of travel and new cars they could not afford is making things easier these days.

Note - I did save as much as 50% of my income in my 50s but that was because my salary for those years went up so much that we had no need for most of it. Even without this extra amount our 401ks would have been in great shape because of starting early.
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Re: MarketWatch: Many young people shouldn’t save for retirement

Post by CletusCaddy »

Gryphon wrote: Sat Oct 01, 2022 11:56 am Second, people who don't get in the habit of saving for retirement when they're young, but instead get in the habit of spend, SPEND, SPEND, aren't likely to change horses 20 years later and suddenly start living below their means.
I believe it. After you’ve eaten at 20 Michelin star restaurants, the 21st just doesn’t bring as much pleasure.

I spent the first ten years of my career traveling and eating out on an expense account. Now the last thing I want to do is get on a plane to relax.
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Re: MarketWatch: Many young people shouldn’t save for retirement

Post by vitaflo »

My wife and I did this naturally. When we were young we spent most of our money (we didn't make a ton). We had a middle class house, normal cars, etc. That took up a lot of our income and we didn't put much into 401k because of it. Sure we could have lived like misers to save the typical 15% or whatever but we didn't.

As our careers progressed we made a lot more money, but our standard of living didn't much change. Our standard of living probably went up about 30% in the past 20 years but our income went up over 300% in that time. We started saving the difference. We ran out of tax advantaged room we were saving so much.

Our goal has always been to basically live the same standard of living throughout life, kinda like the article says. But this kind of just happened naturally, we didn't have some theory or model to base it off of.
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