At one time, in the good old days, most people retiring had savings accounts or treasury bills. They got between 8% -15%. This money supplemented their Social Security. When interest rates tanked, most retirees moved their savings to brokerage firms and had mixed portfolios of bonds and mutual funds. Retirees need to have their principal generate funds that they can live on since the average Social Security payment is $1,054. A person cannot live on $250 a week alone ($13,000 a year). Most retirees were supplementing their Social Security, living on the profits that their portfolios were generating (eg. at 5% on $400,000 that is about $20,000 a year). Many retirees I have talked to have seen their portfolios drop between 25% to 40%. If they had $400,000, they now have $240,000 with a drop of 40%. If you figure they can generate 5%, they only have $12,000 a year now, but we all know nothing is being generated. Their only hope is to leave the money invested and wait for it to go back up, however they can’t. (hit read more)
They need that money to generate income or they have to draw on it. Because it is dropping in value, they are in a negative mode. The retiree is forced to draw on their principal with this economy. As they settle in on this dangerous road, you all will be losing your inheritance, that dream of a summer cottage or that extra cushion for your retirement is dwindling as we speak. And a nightmare may be brewing as you suck in your own belt, you might have to support Grandma when her nest egg disappears. If she takes out $20,000 a year her money will last 12 years. Grandma’s dream for a worry free retirement are shattered and you are left to pick up the pieces.
12 comments:
What? No mention of reverse mortgage companies? Inheritance is only for the wealthy and well connected.
Everyone who retires doesn't necessarily own homes. The grandma I have in mind sold her home and that money is including in her $400,000.
I think I had better have a talk with my Baby Boomer parents and look at their options.
Sorry, didn't mean to imply that all retirees owned homes - only that there is always some ass out there in the Free Market who will make it their life's work to prey on those that do.
Of course, reverse mortgages may well be out of vogue in many areas now that the real-estate bubble has imploded...
I like your feedback Dr. Know...keep it coming.
Genius why not mention the real Culprits? Out of contro government spending which causes taxes to rise and in conjunction with the politicians best partner in crime the FED which causes inflation lowering the cost of all that debt but DECIMATING wage earners and folks on fixed incomes.
OOOOOPS I forgot our new ruler the fublous and omnipotent Obamam just got his $789 Billion Pinata and his mad (economic) scientist Mr G is cooking up another $2 trillion fiasco in the lab.
I am planning for my retirement by praticing on pushing carts (hopefully there will still be super markets left by then) and acquiring a taste for dog and cat food (Honey are we having beef or fish tonight?)I hear they don't taste so bad when you put them between day old bread.
Blame Obama? Think not reader...this was not his doing. All that trickle down economy was no more than a piss on us.
OOOH poor innocent Obama he just wants to help all us little stupid people, GEEEE what a nice man I wish he were here so I could kiss his feet.
Don't be so blind and partisan Genius thats not what I come on this website to read I use to come here for an independent perspective not this rah rah crap you and Gimleteye have gotten caught up in.
I know GWB was an idiot and probably one of the worst pres. the world has ever seen, but if BHO keeps this up he'll be right down there with him.
Let's see the national debt is out of control people have no money and jobs are dissapearing hmmmmm what should we do........ THAT"S IT I'VE GOT IT!!!!!
We'll borrow lots more money and create huge make work government projects so all the fat cats and lobbyist can make lots of money and some will trickle down to the (m)asses at least enough to create an unbeatable political machine at the expense of taxpayers for generations to come. BRILLIANT!!!!!
We'll raise taxes later.
Was their an alternative sure eliminate the corporate income tax ($350 Billion) were given all back to them and more anyway. Corporations in reality don't pay taxes taxes and regulations are reflected in the prices WE pay. So WE consumers ulimately pay corporate taxes anyway. And throw in suspension of withholding federal income tax for 4 months (400 Billion) and you have a plan that puts the money immediately in the hands of those that produce it and frees up alot of capital. Of course this MUST be accompanied by budget cuts something no pres or congress has done since .....hmmm come to think of it it's never been done.
But I know Obama is sooooooo smart and good lucking that 789 Billion seems like such a small price to pay. Get a grip Genius were getting fleeced by the Ds and the Rs.
AMEN!
Wicked retahded that Anon.
Try reading something other than the RNC website.
A biggass chunk of the stim is tax cuts - stuff Obama WANTED in there, but you'd never admit it you big whiner.
The payroll tax holiday is part of the package - something awful evil ol' Obama CAMPAIGNED ON. $400 bucks per person. A third of the $700+ billion package is tax cuts ($235 B or so).
GWB and company did what they set out to do - wreak the government. I don't think they were expecting the next great depression (hence their desperate and clumsy attempts to bail out banks and all that). They set fire to our houses, but didn't think it would spread to their tawny neighborhood too.
Can't blame Obama for trying to do something to put Americans back to work. Or you could since you think unemployment is better than working to build things like a smart energy grid, wind turbines, and all that commie stuff.
Did I tell you about the County Commission Meeting today?
Hey Keynes I hate to burst your BUBBLE (Pun intended) but I don't get my economics from the RNC, but it looks to me like your taking your cues from the DNC and A Gramsci (look it up fool).
Keynes theories have been dicredited by the increase in number and frequency of boom and bust cycles and the duration of the bust have increased, and throw in all the inflation caused by Keynesian BS and its a wonder they haven't pulled his much used arse out of his grave and burned him at the stake.
I doubt you even read my post since I allude to Bush's idiocy and if you were even slightly conscious during the last 8 years you would have noticed that government grew by leaps and bounds that Moron Bush didn't veto ONE spending bill, not ONE. He drove the country deeper in debt by going to war needlessly in Iraq, increasing spending while at the same time cutting taxes.
Read beyond Keynes, Marx or Trotsky (if you read books at all) try Joseph Schumpeter, Adam Smith or Ludwig Von Mises maybe you'll learn something useful.
I don't care if its dimwit Bush or (your golden boy) Obama you can't hock yourself into prosperity plain and simple. We will be paying taxes out of our arse soon and inflation will make life for wage earners and those on pensions HELL! Not in a day a week or a month but watch in the next 2 to 5 years 2+2=4 (not 5 or 798 Billion)
Yes Genius I heard about the Stadium deal and the fix is in one way or another there gonna ram that turd right down our throats (just like the 1100 page stimulus bill)they didn't finish us off yesterday but they will (see miami arean, AAA, Performing arts center and Metrorail for a historical perspective).
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