Anonymous
10/19/2016 19:01
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
Early in my career I worked for fortune 100 companies. Had all the retirement options and took advantage of them. Changed careers and most of the firms are small 3-10 people. None had any type of retirement savings. Turns out 70% of companies do not offer 40ks.
There were people who worked at these places for 10 years with only an Ira as an option. We are heading from a retirement crisis if you look at the numbers.
There were people who worked at these places for 10 years with only an Ira as an option. We are heading from a retirement crisis if you look at the numbers.
Anonymous
10/19/2016 18:23
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
I got my first big corporate job at 21 right out of undergrad, my salary was $50k plus generous bonuses and I kick myself that I never contributed to the 401k they offered WITH A MATCH. I left thousands on the table that I instead spent on drinks with friends and clothes, I finally wizened up 5 years into the job. Now I'm turning 40 and have 13 years of retirement savings rather than 18. Stupid. I wish someone had pulled me aside on day 1 and told me to put as much as I could into the generous 401k program, looking back at what I would have earned in those 5 years I didn't invest would have moved my retirement timeline up a few years. Now I occasionally try to help educate the youngsters out there to not be as foolish as I was.
Anonymous
10/19/2016 16:32
Subject: Re:Do you colleagues/friends talk about money? Ever surprised by what you hear?
It's funny -- personal finance is really so simple. And yet, so many people f*** it up. I get that there are people in true hardship -- single moms, the working poor, etc. I have sympathy for those people and I think our social safety net should come to their aid. But people who are earning $100k plus (even in a HCOL area like DC), who can't seem to get ahead, just baffle me. It's really not rocket science. Live below your means, save a minimum of 15% of your income, invest early and often, don't try to time the market, don't bear too much or too little risk in your investments, and stay the course. Do that for a couple decades and you will be golden. The end.
Anonymous
10/19/2016 16:04
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
I find it amazing how many peers in their 40s and 50s are larding up their HELOCs for what seems like unnecessary indulgences. Splurge vacations, luxury renovations, etc.
Anonymous
10/19/2016 15:10
Subject: Re:Do you colleagues/friends talk about money? Ever surprised by what you hear?
Anonymous wrote:At a summer office job when I was in college, two of my co-workers had multiple serious conversations about what they would do when they won the lottery. It wasn't day-dreaming or fantasizing, they just seemed to have no better plan on how to save up for surgery (necessary) or retirement and so those things were just waiting on a windfall.
My parents weren't great about finances, but I'd never been exposed to the reality of someone in the middle class living paycheck to paycheck with no savings or any plan for saving. It was definitely eye-opening.
During the crash, I had a coworker who expressed frustration to me that her financial adviser was telling her it was a bad idea to cash out all of her stock portion of her retirement savings. She proceeded to do so because she'd "already lost so much value and couldn't afford to lose any more". She is close to retirement age now, and probably won't be able to because her 401k will never recover from missing the stock market recovery.
I know people who are well educated with finance -- i.e. work in/tangentially in the industry -- who cashed out in 2008. And no it's not bc they were set to retire or their kids were going to college in the next 2 yrs. We're talking people in their late 30s with kids in early elementary school. While they rationally understood that you don't lock in the bottom by selling, when it was their money, they just could not stay the course.
Anonymous
10/19/2016 14:58
Subject: Re:Do you colleagues/friends talk about money? Ever surprised by what you hear?
At a summer office job when I was in college, two of my co-workers had multiple serious conversations about what they would do when they won the lottery. It wasn't day-dreaming or fantasizing, they just seemed to have no better plan on how to save up for surgery (necessary) or retirement and so those things were just waiting on a windfall.
My parents weren't great about finances, but I'd never been exposed to the reality of someone in the middle class living paycheck to paycheck with no savings or any plan for saving. It was definitely eye-opening.
During the crash, I had a coworker who expressed frustration to me that her financial adviser was telling her it was a bad idea to cash out all of her stock portion of her retirement savings. She proceeded to do so because she'd "already lost so much value and couldn't afford to lose any more". She is close to retirement age now, and probably won't be able to because her 401k will never recover from missing the stock market recovery.
My parents weren't great about finances, but I'd never been exposed to the reality of someone in the middle class living paycheck to paycheck with no savings or any plan for saving. It was definitely eye-opening.
During the crash, I had a coworker who expressed frustration to me that her financial adviser was telling her it was a bad idea to cash out all of her stock portion of her retirement savings. She proceeded to do so because she'd "already lost so much value and couldn't afford to lose any more". She is close to retirement age now, and probably won't be able to because her 401k will never recover from missing the stock market recovery.
Anonymous
10/19/2016 12:34
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
Anonymous wrote:I personally think it's very justifiable to prioritize family travel, extra-curriculars, enrichment activities during primary and secondary school - all of which cost money that could be be diverted into college savings accounts - over making sure your child can select a mediocre SLAC over a decent state university.
Thank you thank you for saying this, because that is exactly what my family does and I second-guess us frequently.
Anonymous
10/19/2016 12:24
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
I thank my parents for being financially literate and sharing that knowledge with me. My dad told me when I got my first real job to max out the 401K contribution and IRA and use the resulting net paycheck as my income. It was tough, but so glad I did it.
I had friends who financed lifestyle choices with parents money and assumed that would continue indefinitely. Some of them have had rude wake up calls.
I had friends who financed lifestyle choices with parents money and assumed that would continue indefinitely. Some of them have had rude wake up calls.
Anonymous
10/19/2016 12:14
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
I remember the first time I got a raise after finally reaching the point where I was maxing out my 401k, becuase it was my first real take home raise. I mentioned it to my friend and she was shocked able to do so. She made at least twice my salary and said she had never thought or planned to max out.
Anonymous
10/19/2016 12:06
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
All of these people with their spending shenanigans are funding my retirement. There wastefulness increases earnings per share and funds the dividends that will drive my own retirement.
Anonymous
10/19/2016 11:11
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
Anonymous wrote:My boss tells me everything...
Like how she and her husband haven't filed taxes in years and she didn't know until this week.
Or how her husband has never paid the mortgage on time and she didn't know until she had to buy a new car and her credit score was in the 500's.
I just don't understand how she doesn't know these things. They have separate finances but clearly, there is a communication problem.
My roommate took out a 401k loan to take her and her "boyfriend" to the Dominican Republic for 8 days to celebrate her 26 birthday. And justified it by saying it was a good deal on Groupon.
I have tons more of these stories. I am in my late twenties and a lot of people are doing dumb things around me. I just thank God I discovered Dave Ramsey and Mr. Money Mustache when I did. I tried to share my knowledge but anytime I say "You have to cut back on lifestyle" people immediately stop listening.
Recently I just got a raise but I adjusted my 401k so that I still have the same paycheck every month. My friends were like "whats the point of getting a raise if you just going to put in retirement." I explained lifestyle creep and that I live perfectly fine on my income. I would rather save it before I see it. They looked at me like I was speaking another language.
These are fascinating, would love to hear more.
Good on you, PP. I am getting $400 extra month next month and already did the same, just put it in 401k so I never see it.
Anonymous
10/19/2016 11:08
Subject: Re:Do you colleagues/friends talk about money? Ever surprised by what you hear?
Anonymous wrote:A few months ago, I remember reading on this Money Forum that someone benefitted greatly when her manager urged her to max out about 20 years ago. She is now SO grateful to that manager for suggesting that.
In my own case, when I was 26 years old and just starting in BigLaw, I recall our HR manager saying at orientation that we really should definitely max out if at all possible because we were young and had time on our side. She kept saying it over and over, and showed us a Powerpoint about how our money would grow. It made an impression on me, and so I've always maxed out (even now at 46 years old and long out of BigLaw), and am SO grateful to that HR manager for making such a big deal out of it.
If I see a newbie at my company, I'll urge them to max out or close to it. Some people don't get financial education from their parents.
Similar story although not biglaw. I had a prof in college who showed person a vs person b. A only contributed from age 22-30, B from 30-65. I remember A came out better in the scenario she presented. So I started at 21, even though I was *broke*, and I only put in like $50 or $100. Has paid off for me now (yet I still feel on the low end when I read these boards!)
Have a similar story to people that feel like it's a con or that they "want their money now" - but you can't always argue with crazy.
Anonymous
10/19/2016 10:50
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
Anonymous wrote:I have a friend in his late 30s who has not saved anything for retirement. He is a doctor and only recently started making a lot of money. Before that he was working his way through med school, residency, and a fellowship. He works for a small practice so he's not offered a 401k through work. It seems as though he's been to some seminar that has taught him the basics and encouraged him to open a SEP IRA. I really hope he takes the advice and does it sooner rather than later.
It also shocked me that he does understand how these savings vehicles really work. He asked me - "Do those accounts earn interest?" I think he's trying to learn and the sudden increase in his salary has made him pay attention, which is good. But I worry he won't make it a priority and it will take another couple of years for him to fill out the necessary paperwork, open the account, etc.
If his fellowship(s) took him into his mid/late 30s, then he's not a regular old primary care MD -- he's likely a cardiologist, surgeon, some other high end specialist. I don't get it with those guys. If your salary is 500k -- can't you just set aside 50k per yr net in a brokerage account to be used for retirement, regardless of whether you do/don't have a 401k. I don't get why this is SO complicated for such highly paid doctors.
Anonymous
10/19/2016 10:45
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
I have a friend in his late 30s who has not saved anything for retirement. He is a doctor and only recently started making a lot of money. Before that he was working his way through med school, residency, and a fellowship. He works for a small practice so he's not offered a 401k through work. It seems as though he's been to some seminar that has taught him the basics and encouraged him to open a SEP IRA. I really hope he takes the advice and does it sooner rather than later.
It also shocked me that he does understand how these savings vehicles really work. He asked me - "Do those accounts earn interest?" I think he's trying to learn and the sudden increase in his salary has made him pay attention, which is good. But I worry he won't make it a priority and it will take another couple of years for him to fill out the necessary paperwork, open the account, etc.
It also shocked me that he does understand how these savings vehicles really work. He asked me - "Do those accounts earn interest?" I think he's trying to learn and the sudden increase in his salary has made him pay attention, which is good. But I worry he won't make it a priority and it will take another couple of years for him to fill out the necessary paperwork, open the account, etc.
Anonymous
10/19/2016 10:21
Subject: Do you colleagues/friends talk about money? Ever surprised by what you hear?
Anonymous wrote:My boss tells me everything...
Like how she and her husband haven't filed taxes in years and she didn't know until this week.
Or how her husband has never paid the mortgage on time and she didn't know until she had to buy a new car and her credit score was in the 500's.
I just don't understand how she doesn't know these things. They have separate finances but clearly, there is a communication problem.
My roommate took out a 401k loan to take her and her "boyfriend" to the Dominican Republic for 8 days to celebrate her 26 birthday. And justified it by saying it was a good deal on Groupon.
I have tons more of these stories. I am in my late twenties and a lot of people are doing dumb things around me. I just thank God I discovered Dave Ramsey and Mr. Money Mustache when I did. I tried to share my knowledge but anytime I say "You have to cut back on lifestyle" people immediately stop listening.
Recently I just got a raise but I adjusted my 401k so that I still have the same paycheck every month. My friends were like "whats the point of getting a raise if you just going to put in retirement." I explained lifestyle creep and that I live perfectly fine on my income. I would rather save it before I see it. They looked at me like I was speaking another language.
For your late 20s friends -- none of this will mean anything for another 5-10 yrs. I feel like people are into personal finance right away when they get their first "real" jobs, or they are NOT bc they are too busy enjoying the fruits of their labors and vacationing, buying new cars etc. For that second set, sometime at age 32-35 is when I think it first hits and it really could be anything from an HR person harping on them to contribute or a 35 yr old friend saying, I have 300k in retirement and they go -- wait WHAT, I have $0 and then start hustling.