At what age do you hope to retire/Personal Finance and Investing Thread

[Patrick425]

That training has to come from mom and dad because nobody else is going to do it.

 

Sadly this is true. There are some subjects that are over emphasized in school and yet this is one subject that is clearly not communicated enough, if at all. My son frequently complains about how simple money skills are not taught in primary education. I work in the financial industry and the company I work for is heavily involved in a Milwaukee organization called Secure Futures (formally called Make a Difference). The organization's goal is to teach financial literacy to teens. One of the ways it does this is by sending volunteers form the financial community into schools to educate students on a range of different real life personal finance lessons.

[homer]

That training has to come from mom and dad because nobody else is going to do it.

 

Sadly this is true. There are some subjects that are over emphasized in school and yet this is one subject that is clearly not communicated enough, if at all. My son frequently complains about how simple money skills are not taught in primary education. I work in the financial industry and the company I work for is heavily involved in a Milwaukee organization called Secure Futures (formally called Make a Difference). The organization's goal is to teach financial literacy to teens. One of the ways it does this is by sending volunteers form the financial community into schools to educate students on a range of different real life personal finance lessons.

 

There were never any personal finance classes when I was in school in the 80's. We had accounting as an elective but it was balance sheets and general ledger type of stuff. My education came after college when I got a job answering phones at a mutual fund company. During slow times I'd pick up the WSJ Guide to Investing and read.

[nodakfan17]

My high school required a semester-long Personal Financial Management (PFM) course, but allowed people to test out of it with a 70% or better on a preliminary exam. A lot of high-achieving students tested out of it so they could cram another AP course into their schedules. Fast forward to the present. I work with a very nice, very bright recent college grad who is 11 years my junior. We happened to go to the same high school. He was the co-valedictorian of his class. Let’s call him Michael for the sake of anonymity. Michael has been on two vacations this year, but often complains about lacking the funds for a down payment on a home. We often chat about personal finance because it’s an interest of mine. Sometimes I’m shocked by his lack of awareness. I’ll ask, ‘Michael, don’t you remember that from PFM class?’ And he’ll respond, ‘No, I tested out of it.’

[nodakfan17]

Financial literacy education is great, but has its limits. Like many other life skills, financial acumen is cultivated at a young age by observing one’s parents.

[Jimbo]

Interestingly enough, I read a big driver of inequality post WWII has been the increasing number of women attending college. High-earning men are more likely to pair off with high-earning women they meet while in college and that leads to a small number of high-earning households.

 

Yes, I've read this in the paper as well in the last year. Yes, income inequality is increasing as the manufacturing base has been disappearing. But one thing among the crowd who speak out to this is that they don't address the fact that white-collars are now marrying other white-collars, concentrating the wealth. Decades ago a doctor would be willing to marry Suzy Homemaker. Not so anymore.

[homer]

I think the wealth disparity thing is complex and probably has a number of causes. Executive pay, for example, used to be something like 20x the average wage of the rank and file employees back in the 50's. Now it's like 350x. So adjusting for inflation, CEO pay has increased like 1000 percent since the 50's while average wages have more or less stagnated. I'm not advocating anything here...just pointing out one of the potential reasons for increased wealth disparity.

 

Article: https://www.forbes.com/sites/dianahembree/2018/05/22/ceo-pay-skyrockets-to-361-times-that-of-the-average-worker/#6c51c95d776d

[OldSchoolSnapper]

The single greatest cause is the demise of unions. This isn't advocacy, it is just a simple fact. The collective plebes have no influence at the bargaining table when it comes to economic policy. We get most things for pennies on the dollar from China and full employment is no longer seen as a driver for policy. When unions continually lost power the elite could do as they wished. That is you end up with a CEO getting a 1200x raise.

 

Several unions allowed corruption to drive themselves into the ground, and unions had flaws, but on the whole they were fighting for the little guy. The best working class jobs today are the ones that still have powerful unions.

[TURBO]

I'm a teacher in WI, don't get me started on unions, or the lack of unions. I typically paint myself as a conservative, but I was not, nor will I ever be, on board with getting rid of the unions.

 

That was the day that our lives in the education field changed, and the teacher shortage began. It will be felt in the near future, and already is in some districts.

Edited November 20, 2018 by turborickey

[homer]

We are treading very close to political waters so I would just ask everyone to be cognizant of that while posting. Interesting discussion thus far.

[OldSchoolSnapper]

Like most things I believe there is a middle ground. An argument can be made for some unions not looking out for the best interests of the groups they intended to represent. But if I were forced to point to one thing for wage stagnation it is the weakening of unions. You can correlate the two pretty much linearly through the country's history and it's just common sense. Some dude making $14 an hour cannot negotiate with billionaires by himself.

[PlayerHader]

I concur with a lot of this. And I think the weakening of unions coincides with the value of labor being overtaken by the value of capital. It's easy to earn money when you have money.

[BMuch25]

OldSchoolSnapper "The single greatest cause is the demise of unions. This isn't advocacy, it is just a simple fact."

 

That is a bold fact. When precisely do you believe was the beginning of income inequality and the beginning of the demise of unions?

[OldSchoolSnapper]

Meh, I don't wanna go down this road for the reasons Homer pointed out, I'm just going to say that JFK was one of the first major figures to lament the corruption in labor unions. The 1960s are roughly the time I would say some cracks started to appear in the union foundation, probably a little earlier than that. Stagnation started to really surface not long after in the 70s.

 

I think it's silly to try and imply those two things aren't connected. Once there were problems in the unions, it became easier to campaign against them as corrupt bureaucracies in the way we've commonly seen today. Those problems did exist, but by and large, unions were great for most of the middle class. Joey the line worker can't negotiate pay and benefits without a union. They will tell him to take a hike and bring in Tommy. If unions were as robust as they once were you would not have a CEO getting a 1000x raise. You can lament their problems, but they serve a purpose and a properly functioning union is essential for a healthy lower/lower-middle class.

 

There are a million studies on this (second is a column but references a talk from a leading economist).

 

https://www.usatoday.com/story/money/2016/08/30/decline-unions-has-hurt-all-workers-study/89557266/

 

https://www.bloomberg.com/opinion/articles/2018-08-31/weakened-unions-explain-stagnant-wages

 

I'll leave it there, I don't want this to become a Scott Walker battlefield.

[nodakfan17]

I won’t dismiss any other opinions because there’s merit to all of them; however, I’m fairly certain the biggest driver of inequality in our economy this past century has been the relationship between the return on capital and the growth rate of wages. Automation has placed additional value on capital at the expense of labor. Returns on capital investments have far exceeded wage growth over the last 100 years, even though historical evidence dating back hundreds of years shows the two have been tightly correlated until recently. In an effort to bring this thread full circle, let me state that if you want a secure retirement, you have to focus on converting your labor returns into capital.

[OldSchoolSnapper]

Automation is obviously inevitable and something labor needs to adapt to, but a better union is precisely the kind of thing that would have made that transition better for the worker. Here is a good read about that topic in Germany.

 

https://thehill.com/opinion/finance/373415-german-unions-big-win-shows-us-labor-the-path-forward

[nate82]

Meh, I don't wanna go down this road for the reasons Homer pointed out, I'm just going to say that JFK was one of the first major figures to lament the corruption in labor unions. The 1960s are roughly the time I would say some cracks started to appear in the union foundation, probably a little earlier than that. Stagnation started to really surface not long after in the 70s.

 

I think it's silly to try and imply those two things aren't connected. Once there were problems in the unions, it became easier to campaign against them as corrupt bureaucracies in the way we've commonly seen today. Those problems did exist, but by and large, unions were great for most of the middle class. Joey the line worker can't negotiate pay and benefits without a union. They will tell him to take a hike and bring in Tommy. If unions were as robust as they once were you would not have a CEO getting a 1000x raise. You can lament their problems, but they serve a purpose and a properly functioning union is essential for a healthy lower/lower-middle class.

 

There are a million studies on this (second is a column but references a talk from a leading economist).

 

https://www.usatoday.com/story/money/2016/08/30/decline-unions-has-hurt-all-workers-study/89557266/

 

https://www.bloomberg.com/opinion/articles/2018-08-31/weakened-unions-explain-stagnant-wages

 

I'll leave it there, I don't want this to become a Scott Walker battlefield.

 

I stopped reading the bloomberg article once I saw the name Alan Krueger and the usatoday article just spews the same horrible economic theories. Thomas Sowell and others are far and above smarter than Krueger ever will be in economics.

 

https://www.nationalreview.com/2011/03/union-myths-thomas-sowell/

 

A functioning union is not needed for a healthy middle and lower class. Actually unions hurt the middle class and the lower class more than they help them. Unions look out for their workers as much as a corporation does which is basically not at all.

[TURBO]

nate82, ever been part of a union?

[nate82]

nate82, ever been part of a union?

 

Yes, it was horrible worst experience ever.

[OldSchoolSnapper]

nate82, ever been part of a union?

 

Yes, it was horrible worst experience ever.

 

 

 

I'm not delving into this any further because I can see where it's gonna go. But the "I stopped reading when I saw this guy's name" is pretty lame. People say stuff like that when they want an out. You didn't really delve into anything at all and just used the name thing and then made an outlandish blanket statement about labor unions. But that'll be my last post on unions since I can see this unraveling in a hurry.

Edited November 21, 2018 by OldSchoolSnapper

[nate82]

nate82, ever been part of a union?

 

Yes, it was horrible worst experience ever.

 

 

 

I'm not delving into this any further because I can see where it's gonna go. But the "I stopped reading when I saw this guy's name" is pretty lame. People say stuff like that when they want an out.

 

I stop reading anything by Krueger because he is an idiot. It has nothing to do with wanting an out, I have read enough of his opinions that I know almost exactly what he is going to say before even getting through half way through the article. It is dumb Keynesian fake economics theory.

[OldSchoolSnapper]

I have a really hard time calling somebody who went to Cornell for Labor Relations got a PhD in economics from Harvard an idiot. I wouldn't call anybody with that pedigree an idiot regardless of their beliefs simply because they aren't one and would debate me in circles. Yes, degrees aren't the end all, but he is clearly not an "idiot" and that type of silly statement isn't really progressing what was a good discussion.

[CheezWizHed]

I'm not delving into this any further because I can see where it's gonna go.

 

Agreed. The union discussion is starting to go the direction of political-ness and off course of the OP. Probably best to get back to retirement instead.

[DHonks]

Financial literacy education is great, but has its limits. Like many other life skills, financial acumen is cultivated at a young age by observing one’s parents.

 

I’ve taught personal finance as part of my mandatory high school Econ class for 10 years. This year I have the weirdest gap I’ve ever seen. I have the really smart kids that listen and want to learn, the kids that try just a little but like to say “Econ is so hard,” and those that just don’t care. And why should I be surprised. Arizona has a half-day for seniors, so they don’t take senior year seriously. The kids work full-time jobs starting at noon. And there’s no money for college because the kids don’t save money or apply for scholarships, and the parents are over-extended in their finances.

 

The reality is the parents need to model good behavior from a young age, encourage building of skills, and be supported by schools. Too many kids are given poor guidance by parents and then ask schools and jobs to teach them everything.

[homer]

Let's get the topic back to the retirement question.

 

We do have a political board (https://www.tapatalk.com/groups/brewerfanpoliticalscene/) in case anyone wants to delve further into the union discussion.

[MrTPlush]

When I got my first job out of college another girl started at the same time. She decided she was opting out of the retirement plan to save money even though she planned on living at home. So she sacrificed $1,200 in free money due to the match to have like $100 extra a month in her pocket. If historical rates continue she decided $1,200 now is better than $75,000+ for her retirement.

 

Kids need a class that involves investing and loans. They are some of the most important things you deal with in your life.