Boomers reaching the end of their financial lines

[ted]

Some choose to extend credit others choose estate planning.

25 years ago we purchased a 10 year - long term health care insurance policy.
Hopefully we'll never need it , but that's like a million dollars in long term care.
It provides peace of mind that if one of us needs long term health care we can afford it without selling any of our assets.

My MIL had Alzheimer's and was in a skilled nursing home for 10 years.
Fortunately 10 years before her illness I had mentioned our long term care insurance to her and unknown to us she had purchased long term care coverage.
That sure was nice! It saved us $100,000 a year for 10 years.
Insurance companies found long term care policies were not profitable and now it's difficult to find long term insurance today.

[Por_sha911]

Originally Posted by cstreit

I don't understand that mentality. Did they just assume they would die before retirement? ...or just work until they were dead? ...or that somehow they could go from $300k/year to $35k per year on SS?

Some people believe folks who shout that the government is going to crash, you money will be worth nothing... shouting economic doom and gloom. Problem is they (the ones who listen to these predictions) are gambling their future on something that may or may not happen.

Others, just refuse to be responsible. "Eat drink and be merry for tomorrow we may die". Sounds good but they either become destitute or their selfishness becomes a burden on their family or the government.

Originally Posted by McLovin

How easily you are influenced by others, and how much the “approval” or “respect” of others matters to you makes a big difference. It can drive people to financial insanity/suicide

Reminds me of people who brag about all their vacations and new car or motorcycle but have it all through debt and have zero net equity. I had a friend who took lots of vacations and "owned" a home 4 or 5 times what mine (which is paid for) was worth. His spending caught up with him (his wife never knew). Eventually they was so burdened with debt he had to have the home foreclosed, file bankruptcy, and have nothing. sad.

Originally Posted by McLovin

My theory is that it’s just how many people are wired. I think a huuuuge part of it is genetics. And some from how you were raised. They just have a huge blind spot as to their financial future.

Or, they were raised that way. My wife lived in middle class neighborhood but her dad made upper middle income. He spent every dime on vacations and luxuries. She thought this was normal. When we got married, she couldn't understand why we couldn't do the same thing with a much lower income and no credit (credit cards back then were only for wealthy people). We had many discussions on how there is only so much money and we can't spend it twice. She hated that we didn't go on extravagant vacations and have the fancier house but she now loves that we are debt free and can give help to our daughter instead of needing help.

I am enjoying that I can sleep at night not worrying about my future. That peace of mind is worth far more than the stuff I would have bought that are now rusted junk.

To those who say "live it up because you don't want to regret missing out", I say I enjoy my life but just live within my means and saved for the future. I don't need to have stuff or go expensive places to be happy. And, whether you have stuff or not, someday it will be someone elses and the best investment is in eternity. If believe there is no afterlife then, you won't be able to remember what you did anyway. If there is, what you did won't matter. Until that day, I want to add to class average of humanity rather than only take what I can get.

(disclaimer: nothing said here is a reflection on any one person in Pelican)

[Gretch]

Little in life is more comforting as well as liberating, than honest financial security........

Sadly many people NEVER experience this.

[McLovin]

And from what I’m seeing firsthand, little is more terrifying than approaching 70 years old with no assets and soon to be little to no income.

[McLovin]

The past 30 years of lavish spending don’t appear to be bringing much satisfaction or comfort at this time.

[Skillet83]

Originally Posted by GH85Carrera

Back in the early 1980s there was an oil boom and the "oiles" were tossing money around like it was nothing special. Then the oil boom became a oil bust, and brought down Penn Square bank and made national ripples and many other bank failures.

We had a few members with multiple new Porsches and huge houses and they all just dropped out of the club. They were spending money and leveraging everything to borrow more money. I bumped into one of them a few years later driving a POS of a Pinto and working at a gas station convenience store. It seems most of the oiles had not saved a cent, and were spending more than they made. So it is not a new thing.

I can't imagine trying to live above my means. I know my wife would not put up with it. We are making more than we spend and she has been retired for many years now.

Being in OKC in the 80's & 90's, living through that in some pretty influential circles as a young man was quite interesting. There was a book written about the Penn Square Bank deal, "Funny Money", about the craziness. Bankers were wearing mickey mouse ears on the job. How about them gold nugget rolex watches? hehe.

[flatbutt]

Originally Posted by Gretch

Little in life is more comforting as well as liberating, than honest financial security........

Sadly many people NEVER experience this.

Then there are those for whom "enough" is never enough.

[Tervuren]

The problem with compound interest is inflation.
That saving mentality of the past will leave one poorer in the long run and without anything to show for it.

Originally Posted by rwest

compounded interest is

The real thing to do requires a lot more initiative; putting one's resources to use to generate income or resource streams beyond a paycheck.

[Crowbob]

If you can save while earning enough interest to match inflation you can at least not lose any ground.

Local CU here is offering a 13-month CD at 5.12% APY. That’s pretty close to current CPI increase.

Ibond yields are 6.89% right now. Those rates change every 6 months though, depending on latest CPI-U.

You won’t get rich for sure but at least you can sorta keep up.

[GH85Carrera]

Originally Posted by Skillet83

Being in OKC in the 80's & 90's, living through that in some pretty influential circles as a young man was quite interesting. There was a book written about the Penn Square Bank deal, "Funny Money", about the craziness. Bankers were wearing mickey mouse ears on the job. How about them gold nugget rolex watches? hehe.

One of my friend's wife's mother was a FDIC inspector on the team that walked into Penn Square bank to shut them down. She said they started looking for the loan papers of million dollar and up loans. Often all they had was an IOU written on a napkin from the Slpit-T bar with I owe you one million dollars, and signed Billy Bob Smith. No SSN number, no terms, just an IOU and he got a million bucks.

One of my buddies was just average Joe, and had a checking account there like any other bank. He had written a check to American Express for his monthly payment. The check bounced and American Express called with a very upset collection manager. My buddy got him calmed down, and asked the guy to read the name of the bank on the check. The check bounced not from lack of funds, but the bank bounced. My buddy had to stand in a long line to go in and get a check from the FDIC for all his funds and open a new bank account at another bank.

Another buddy several years later was in truly the middle of "Outer Mongolia" on a medical mission, and sitting around a community campfire someone asked where he was from. He said Oklahoma City. And the questioners pointed and replied, ah, Penn Square Bank! They had heard of it on the other side of the planet in the middle of nowhere.

[KFC911]

Originally Posted by Tervuren

The problem with compound interest is inflation.
That saving mentality of the past will leave one poorer in the long run and without anything to show for it.



The real thing to do requires a lot more initiative; putting one's resources to use to generate income or resource streams beyond a paycheck.

Everyone's personal situation is different, but I would disagree. Inflation is transient .... I started my corporate career when it was double what it is currently .... enjoyed life, spent plenty , and saved and invested while doing so.... wouldn't change a thing. Left the corporate world at 48 .... and never looked back either.

If one's nest egg is sufficient compared to one's "burn rate", the current environment allows one to "lock in" and more than cover inflation while NEVER touching the nest egg. There are many ways to reach financial independence .... some folks just don't have "it" in them .... but most folks on this board have figured out a path that works "for them" imo.

Interesting thread McLuv!

I'm poor compared to many on this board .... couldn't relate to many when I found it decades ago .... and still can't .

Lotsa ways to skin a dawg imo...

[GH85Carrera]

One of the couples that owned the house across the street from us were a young couple, (30s) and they both worked and had a daughter that was 16. She drove a new high end Volvo and he had a nice Pickup, and a Corvette as a toy, and the daughter had an older Volvo as her car. Almost all the houses in our neighborhood have three car garages, and he kept the cars in the garage, the daughter parked in front of the 3rd car garage door, and the yard well kept. Nice folks. They would go to Hawaii and spend two weeks in a timeshare every year. Then one year the AC system went out and they ended up having to do a full furnace and AC system replacement, followed by the water heater needing replacement followed by replacing the stockade fence replacement. It was too much, and they went into default on the mortgage, and had to sell. They were leveraged that much just to live in a nice house and take two week vacations to Hawaii.

We were sad to see them go as they were nice folks, just spent too much on stupid stuff.

[The Synergizer]

Kind of a funny thread on a website forum that caters to higher end cars.
Everyone must have found this place for one reason or another, and probably are much more astute financially than 90% of those out in the regular world. The world without Porsches, BMW's etc... So this thread is kind of an echo chamber among successful people, and doesn't help those heading off the cliff.

I have learned, everyone survives, one way or another.. Although their life expectancy may be far shorter than expected.

[1990C4S]

Nothing wrong with paying cash for a car that appreciates in value.

[Seahawk]

Originally Posted by The Synergizer

...and doesn't help those heading off the cliff.

I have learned, everyone survives, one way or another.. Although their life expectancy may be far shorter than expected.

I really like your last line.

To your first point, the rules of personal/household finance haven't changed in forever...it is just that some want to try and bend the known financial guidelines to their own proclivities and then act surprised when the inevitable occurs.

The cliff is of their own making.

[Hugh R]

Originally Posted by cockerpunk

i mean sex, drugs and rock and roll are all super cheap entertainment. that's why they ravage small town america.

what will kill boomers financially isnt having done sex, drugs and rock and roll, it will be healthcare costs that they refuse to socialize.

Putting socialized medicine aside, which I think sort of works in Canada, due to the taxes, you think I
should pay for your generation's healthcare because of you not being ants, but grasshoppers?

[Captain Ahab Jr]

Live life within your means, some people, couples and families get it and some don't

An unfortunate number just don't earn enough to do it even if they wanted to

[cockerpunk]

Originally Posted by Hugh R

Putting socialized medicine aside, which I think sort of works in Canada, due to the taxes, you think I
should pay for your generation's healthcare because of you not being ants, but grasshoppers?

its not a hypothetical, my generation is going to pay for your generations health care costs. we already are lol. thats not a question of should or should not, thats just what is going to happen, and is currently happening. thats how health insurance works, thats how medicare works. the boomers (and genX) will run out of money, and we are going to pay for them at that point.

amazing you think trying to turn that question around on me would be some kind of argument lol.

we already are paying for your healthcare, that will only increase as we all age. you are welcome. you deserve quality healthcare.

[Gretch]

Originally Posted by Seahawk

I really like your last line.

To your first point, the rules of personal/household finance haven't changed in forever...it is just that some want to try and bend the known financial guidelines to their own proclivities and then act surprised when the inevitable occurs.

The cliff is of their own making.

people who behave like that have never known a day of hunger, a refusal from the oil man to fill the tank, a car that breaks down and cannot get them to work............. or a call from ANY bill collector........

Existential threats early in life condition a person to avoid such experiences at all costs.

Ultimately, the government is the benefactor of last resort........... once destitute, it is amazing how well off north americans actually are. Zero liberties, zero independence, but no one is forced to live on the street.........

Some people have learned early on to make do with such a lifestyle.............. A desolate existence, the only freedom of which is "accountability". pretty chitty existence, if you ask moi.

[stevej37]

At my age...I worry more about leaving this life with too much money.
I'm hoping to break even.