They're Breaking Every Retirement Rule to Be Off Now, Not Later | Hacker News Reader

They're Breaking Every Retirement Rule to Be Off Now, Not Later

wsj.com

16 pointsmooreds38 comments

I see that the fable of the Ant and the Grasshopper and what happened to the grasshopper when winter came has been forgotten.

There is a lot of debate about how much you need for retirement here in Australia.

Financial advisers love to ask how much you think you need a year once you retire, expecting you to quote a figure about the same as your current salary. But once your house is paid off and your kids move out, how much are you really spending maintaining your things, feeding yourself, and going on a holiday once a year? 20k do you think? More?

Presumably you mean early retirement since target retirement income only matters when calculating how much to have saved. That is a nice goal and I’d like to see more couples attempt it. However, retiring with the ability to withdraw only $20k is so little. Even small emergencies would force a big percentage drawdown. There would be zero ability to respond to family events with additional travel or assistance. If the retirees move to a cheap area to make budget, there’s possibly even more travel. Better to work a few more years, for most.

Percentage of income is a crude tool, but the realistic flat amount to live can easily be 50% of retirees’ working income. Personal taste and family situation add to that.

I was thinking for target retirement. How much you need to have saved to get you from 65 till death. (25ish years).

For early retirement I would want more, because you have your whole life to live. Places to see, mountains to climb, forests to explore.

But this is the interesting point, if you think you can retire with with 500k rather than 1M in the bank, you can spend the difference while you are young.

Holiday once a year is working people's thing. For us retirees holiday is 365 days long. Also can't sleep in hostels anymore, so need more money.

Since retirees have more time when they travel they can save money in other ways.

Traveling during the off-season. Short-term rentals in apartments instead of staying in hotels. Or even house-sitting or house swaps. Buying food from local grocery stores, and cooking at the apartment, instead of eating out every meal. Taking public transit or walking or cycling instead of renting a car.

Older people get concessions and discounts on tickets in a lot of places.

> Also can't sleep in hostels anymore, so need more money.

Hostels don't have age limits so you sure could. And some do, though understandably it's not that common.

Must be nice. 20k here in New York will barely pay your property taxes on a middle class home (not including heat, electricity, insurance or other maintenance). Then when you add the cost of healthcare, transportation, food and every other expense and things add up quickly.

> once your house is paid off

Ah, a concept from the Before Times...

There are some folks in the /r/fatFIRE sub that spend >$80k/year on just lifestyle things

Sounds pretty dull. Maybe that’s why people are taking a break when they’re young and enjoying their life.

Eh? 20k?

Are you insane? Insurance, rates, food, utilities are already more than $30k and that’s with zero travel or other expenditure.

Haha, I must live a very modest life :)

Don’t worry, savers will be made to bail them out one way or another.

Savers are people who were lucky in a very specific policy configuration. No point in denigrating people realizing they operate in a rigged system. Irresponsible people are a very small slice of the pie, compared to people who were hit with joblessness, healthcare expenses beyond their means, and those who could never make enough to save enough.

We could've afforded pensions and universal healthcare. That productivity was direct to corporate profits and management compensation instead. This was a choice, this is the outcome.

https://www.epi.org/publication/retirement-in-america/

https://www.nytimes.com/2024/05/08/magazine/401k-retirement-...

https://www.nbcnews.com/business/retirement/great-401-k-expe...

https://press.aarp.org/2024-4-24-New-AARP-Survey-1-in-5-Amer...

https://thehill.com/business/personal-finance/3991136-nearly...

https://www.amjmed.com/article/S0002-93430900525-7/fulltext

That would be a salient point if this article wasn't specifically about the people being irresponsible.

People should be mindful that rage bait should not set policy. A reminder to make data informed decisions, and to not take such a piece as anything other than an unhealthy reward center hit.

Some humans are irresponsible, and will always incur some drag on systems at scale.

Median US retirement savings for those entering retirement (65+) is around $200k. This generation had the largest wealth expansion in human history. That’s about $500 saved per year for 40 years at 9% inflation adjusted return (easy to get with an S&P 500 index fund). Less than $50/month.

They could have chosen to save more; they chose not to.

https://www.officialdata.org/us/stocks/s-p-500/1984?amount=1...

Interpret the data however you want. Policy through votes will come for the wealth eventually, and the folks at the top hold most of it. Progress is a function of cohort turnover in this regard. Old people with old ideas age out, young people age into voting.

> About 93% of U.S. households' stock market wealth is held by the top 10%. ; While it's true that a record high 58% of American households do own stocks via mutual funds or as individual shares, in the aggregate the amount of stock most of these folks own is tiny.

https://www.axios.com/2024/01/10/wealthy-own-record-share-st...

Yes, because many people choose not to save. While not everyone could save $100/month (double the amount I mentioned), almost everyone over the age of say 25 can. This was attainable for the majority even 40 years ago.

Again, Americans can save more, the savings rate skyrocketed for instance during the pandemic even as unemployment increased dramatically, they choose not to: https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQFv4v6...

> Yes, because many people choose not to save.

You keep saying this, but this is not what the data shows.

https://www.google.com/search?q=retirement+crisis

https://www.ncoa.org/article/addressing-the-nations-retireme...

https://www.cnn.com/2024/04/02/economy/americans-struggle-to...

https://www.pewtrusts.org/en/about/news-room/opinion/2024/01...

https://www.bloomberg.com/news/features/2024-05-24/retiremen... | https://archive.today/OZOWz

https://www.lynalden.com/september-2024-newsletter/

Those are all links to symptoms, not causes.

> 80% of households with older adults—or 47 million of such households—are financially struggling today or are at risk of falling into economic insecurity as they age.

I mean, of course people without any savings are struggling financially. I feel like I’m missing something here, the problem seems obvious.

You need extra money to save it.

> Policy through votes will come for the wealth eventually

No doubt, but might doesn’t make right.

Theft is still stealing if 50% of the population plus one approve of it.

If the majority of a people consider a thing to not be theft, then there’s a strong argument that it’s more not theft than is, since theft is defined by and for humans.

Theft is not simply taking something from someone, it is doing so unjustly, immorally, and/or unlawfully. Definitions of what is just, moral, and lawful vary significantly.

Of course, you must also consider how a thing is defined across time, and how stable that definition is.

The idea that taxes are theft applies to a specific mental model [1]. Whether that model is relied on for policy is up to political governance. It seems unlikely though [2] [3] [4], based on electorate sentiment, composition, and turnover rate. I cannot speak to this specific mental model, but it is important to be aware that it exists when interfacing with people who have such a belief system.

[1] https://academic.oup.com/book/47090/chapter-abstract/4159030...

[2] https://www.pewresearch.org/politics/wp-content/uploads/site...

[3] https://www.pewresearch.org/short-reads/2023/04/07/top-tax-f...

[4] https://www.oxfam.org/en/press-releases/nearly-three-quarter...

Well, I did provide data showing they can save but don’t, see the graph.

My father-in-law (who is about to retire) tells a story about his former boss who retired and then died less than a year afterwards (the boss was in his 60's and thought to be healthy so this was a shock). The lesson he apparently took from this was to live frugally and retire ASAP. Weirdly enough, my takeaway from the anecdote was the opposite: having a long and healthy retirement isn't a guarantee, so I would much rather delay my retirement by either taking sabbaticals when I am younger and healthier, or by increasing spending and hopefully enjoying a higher quality-of-life.

Keep in mind (if you’re in the US) that any ailment discovered while “taking a break” from health insurance becomes a preexisting condition for every subsequent insurance provider. It may be perverse, but going to the doctor while not on insurance can be financially devastating even if it’s a “minor” visit (check up). Such a broken system.

This depends on various things such as the state you live in. The worst financial disaster I ever went through resulted from medical care supposedly "covered" by employer-provided insurance, which turned out to be terrible in ways I had never imagined possible, leaving me with a mountain of debt (while going through a divorce, no less). Conversely, on two occasions - once in Oregon and once in Washington - I went to the ER in need of care while unemployed and uninsured, and the state health plan just... took care of me; it was fine. (One of these occasions was a career hiatus, as described in the article.)

Oregon permitted direct enrollment onto Medicaid when you show up to the hospital and qualify for it, and they don't chase down and audit most of those enrolled thankfully.

By the way, if your still in the Greater Seattle Area you might check out the Connections Museum & Seattle Community Network, as both might be up your alley.

Thank you for the suggestions!

that hasn't been a thing since Obamacare in 2010!

Which is a very important thing to amplify. Healthcare in the US is full of gotchas and small exceptions that can be absolutely devastating if you fall through the cracks. But Obamacare's mandate of coverage for pre-existing conditions was a huge step forward.

The current Republican Presidential Candidate did claim he was going to repeal Obamacare as late as January this year, so maybe don't count on it continuing to be the case.

Strategy: propose renaming it to his name. Let him tweak it insignificantly. Let him claim it’s the biggest improvement in healthcare EVER, then BING BING, continued coverage and damage mitigated? CAPS for emulating his character. I dunno—could be worth a shot! Healthcare in employment gap is fresh on my mind :)

> Let him tweak it insignificantly.

Yes, because everyone is happy with the current system, so let's do something to make sure it lasts forever!

Politics and naming aside - the current system is awful and expensive, and did nothing to address the root causes. You don't fix that by enshrining the broken system as some sort of anti-Trump thing. Even if you hate the guy, he's still right - the system is broken and getting worse with every new strip of duct tape.

Discrimination based on preexisting conditions isn't allowed anymore because of the "Obamacare" law. Your information is over a decade out of date.

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