A preview of the U.S. without pensions

[goshengirl]

Being debt free is a great thing however it does have a drawback. Once you no longer have credit cards and bank payments then shortly thereafter you have no credit. If you do need to make a major purchase on credit you can not as your credit rating has vanished due to not making credit payments. I am debt free as well as my gal. Our home and all land and vehicles are paid off.

We've never carried a car loan, and we paid off our house two months ago. We have one credit card, but we never ever carry a balance. Consequently, we do have a credit rating, and we can use the card for online purchases (preferred over a debit card for security reasons) and also get cash back each month. But we've never paid a dime of interest because the balance is paid in full each month.

It's an option to consider, if a credit rating is something you think you might need. People tell me all the time that we can't do it this way, that temptation is too great and we'll end up making only minimum payments and over spending, yada yada yada. But we've lived this way for decades and never overspent, never paid interest on our card. I think if you're already used to staying below your means and buying only what you need, it's not hard at all.

 

[PopPopT]

Some utility companies report payment history, some do not. Most of us probably pay utility bills of one kind or another and paying them on time is a good thing, credit reporting or not.

We have and maintain a credit card. We do not carry a balance on that card from month to month so do not pay interest. It also gives us 1 or 2 % (can't remember exactly) of our purchases back in cash. I like the separation it provides between a vendor and my checking account. And I don't feel like I have to carry or turn over as much cash. I still have some cash for emergencies or if there should happen to be a problem with that credit card.

I've had a pocket full of credit cards and been in debt up to my eyeballs. I don't want to go back there. But I have learned to use credit responsibly and it is nice seeing a credit score in the high 700s, even though I have no intention of borrowing more any time soon. Should I need to borrow in the future, that credit history matters. And as mentioned above, insurance companies pay attention, too.

Whether you use cash or credit or both, just be responsible and wise about their use.

 

[The Lazy L]

Being debt free is a great thing however it does have a drawback. Once you no longer have credit cards and bank payments then shortly thereafter you have no credit. If you do need to make a major purchase on credit you can not as your credit rating has vanished due to not making credit payments. I am debt free as well as my gal. Our home and all land and vehicles are paid off.

My daughter and husband uses their credit card for ALL purchases. AND she pays off the CC balance EVERY month. The CC has "rewards" so every airline flight or hotel they had used was paid for by the CC rewards. Plus they are maintaining a credit rating.

 

[hiwall]

My daughter and husband uses their credit card for ALL purchases. AND she pays off the CC balance EVERY month. The CC has "rewards" so every airline flight or hotel they had used was paid for by the CC rewards. Plus they are maintaining a credit rating.

Same with us. We use our credit card for every possible purchase. We get 1-1/2% back. Free money.
Also handling cash is just one more thing that can transfer bugs like the flu going around right now. Also at the end of the year the credit card company gives us a report showing what we spent all our money on during the year.

 

[Outlier]

My wife has been through (3) layoffs in her career, while I had one employer go chapter 7 on me.

We learned early on not to count the eggs before they are hatched. Never had kids because we never made much money
even when we were working- didn't think we could afford them.

Lived in a cheap little apartment for (8) years saving money for a house. Bought a little 2 bedroom / 1 bath house that the real estate agents all referred to
as a "starter" house. Still live there 21 years later. Paid if off about (6) years ago.

Own (3) vehicles, all purchased new with cash. We avoid vehicles "loaded" with options, and we keep 'em a long time (bought a new 2013 Corolla to replace
a 1996 Corolla we bought new, for example)

Bought a couple of parcels of land for cash. Sold one with owner financing and now we collect interest. Still have the other one.

Still have dial-up internet. Prepaid cell phones that cost us about six bucks a month each. ONE television set, about 10 years old (no cable; just
a 25 ft tall antenna I built in the back yard).

I am 59 and I could retire today if I wanted to. But it did not come easy.



Oh, I bought the wife a cheap engagement ring, maybe a few hundred bucks back in the late 1980's.

But I also bought her a brand new Plymouth Horizon- Most expensive purchase I had ever made at the time, but she needed a car if she was going to find a job.

 

[Drfacefixer]

There are no retirement programs anymore. All your hard earned retirement is invested in smoke and mirrors unless youve self managed your retirement funds and put them in something solid. Government retirement is 1's and 0's created out of thin air. A few might make it but I fear that most will wake up to pilferred accounts worth much less than they thought. Sucks but I wouldnt count on anything but a bird in the hand. I dont say any of this to be snarky. I think its extremely sad and I hope I am completely wrong. I fear I am not however. Its criminal what we have done to our monetary system.

It’s going away at the federal level. Military retirement system is now a matching 401k. As the government service employees phase out that too will be turned into a low to modest return savings plan. The government is starting to put the responsibility on you, not just pay you forever for doing 20 years. Now the states and the local counties need to follow suit. Fire, police and city officials have amazing retirement benefits but it’s spending tax dollars twenty years into the future. My PD gets life benefits for as little as two years service. While I am great full for what they do, I don’t know any other job that offers benefits close to what they can. As long as the numbers stay low, it’s sustainable for now.

 

[angie_nrs]

Seriously, if a burglar decided to break in and steal all of our stuff, they'd be pretty disappointed. Many of our "treasures" are things that we use all the time that I really doubt they'd be looking for to collect some quick cash. I doubt they'd want to haul off the pressure canners and the shelf of Mason jars...

I kinda like it that way. Not as much stuff to own me.

I totally laughed when I read this. We are the same way. It's not that we don't have valuable things, it's just that nobody would ever find them as they are not out in the open. I can only imagine their first assessment of our place.....WTH? A flip phone, slow DSL with a $100 refurb Chromebook, a 10 year old TV, a CD/radio on the counter, old VHS tapes in the living room cabinet, wedding keepsakes in the china cabinet. Going thru the house would be even more disappointing to them. Especially if they got to the bedroom and someone was home......they'd be sorry they entered. If they wanted our cash, they'd have to spend quite a bit of time looking for it and even more time trying to get at it. Yeah, good luck with that.

I don't trust retirement. Companies go bankrupt and so do governments. The trick is to diversify, in my opinion. It was explained to me this way. If you have one income and it brings you $100/mo and it fails then you have nothing. If you have 100 incomes that each bring you $1/mo and one fails then you still have $99.

Retirements are great if they are part of a larger plan including savings and other income.

Live under your means. We bought this house less than two and a half years ago. We will have it paid for this year or next. We pay cash for cars.

I agree 100%! Retirement is not just an account that is labeled as such. You are smart to have assets (as well as a retirement account) that are paid for. Those assets could be anything you are an expert in (or not) such as equipment, parts, property, comic books, PM's, cash, tools......basically anything that has value to someone else. If our retirement account went dry, we'd have lots of other ways to bring in money like selling hard assets. If the stock market took a dive, it still gives us other ways to gather income. Plus, if you have no debt, having a large income is not necessary.

Being debt free is a great thing however it does have a drawback. Once you no longer have credit cards and bank payments then shortly thereafter you have no credit. If you do need to make a major purchase on credit you can not as your credit rating has vanished due to not making credit payments. I am debt free as well as my gal. Our home and all land and vehicles are paid off.

I do not agree with this. We have been debt free for at least 8 years and only use our credit cards for online purchases for the most part, which is well under our max credit limit, which I have told them I do NOT want increased. Discover card supplies you with your credit score and our last score was 825. I only have 2 major credit cards with a couple of store cards that I hardly ever use. However, I have never made a late payment on any of my bills and I pay in full every month. I just mention this so that people don't think they have to use credit in order to get a good score. The only reason I even care about my credit score is b/c a good score lowers your insurance rates. I also like to keep an eye on it as an early detection to fraudulent activity or ID theft.

It’s going away at the federal level. Military retirement system is now a matching 401k. As the government service employees phase out that too will be turned into a low to modest return savings plan. The government is starting to put the responsibility on you, not just pay you forever for doing 20 years. Now the states and the local counties need to follow suit. Fire, police and city officials have amazing retirement benefits but it’s spending tax dollars twenty years into the future. My PD gets life benefits for as little as two years service. While I am great full for what they do, I don’t know any other job that offers benefits close to what they can. As long as the numbers stay low, it’s sustainable for now.

I think this is a good thing and I know it is transitioning in the high schools here to individual plans. The amount the schools are paying in retirement funds is a big percentage of the overall budget. It was a crazy amount that I read, but I can't remember now what the actual number was. This is one reason why you can't throw money at the schools and make them better.....b/c most of that money is being spent on staff that are no longer there.

I think pensions are empty promises....kinda like SS. If you trust the sources of that pension, then more power to you. I trust no one! I've always maintained my own retirement account, but I started saving in my 20's. I made sure my kids did the same thing. They got a Roth IRA for a graduation present. I wish they would put more into it while they are young.....I'm still working on them. I don't like the whole idea of pensions and I really don't like the idea of state and government employees getting pension b/c the taxpayer is on the hook for it. I much prefer folks take responsibility for their own retirement instead of relying on taxpayers. If they personally decide not to, then so be it.....they can personally suffer the consequences. I do indeed feel bad for the folks in this article that the OP posted about. It's not fair that those folks trusted their employer to make good on their promises and they failed. My heart truly breaks for those folks.

The only way to avoid that in the future is to not make unfounded promises in the first place! That goes for both private and public sectors. I know I'm dreaming here, but wouldn't it make sense for high schools to discuss this issue and make it a requirement for students to pass a personal retirement coarse before graduating???? Pipe dream......I know. The schools don't want to talk about independence and responsibility.......

 

[Drfacefixer]

The only way to avoid that in the future is to not make unfounded promises in the first place! That goes for both private and public sectors. I know I'm dreaming here, but wouldn't it make sense for high schools to discuss this issue and make it a requirement for students to pass a personal retirement coarse before graduating???? Pipe dream......I know. The schools don't want to talk about independence and responsibility.......

Ehh...no. This is a Capitalistic society. We cant all be the Tycoons and the Barron’s. We need employees. Those that figure it out quickly and have capital and guidance will remain wealthy. Those that figure it out quickly, but have to make their own way will do fine and make up the upper class. Those that just didn’t get it until later even though they are surrounded by it, will be the middle class. And those that didn’t understand hard honest work only goes so far without making your money work for you.... they get the last piece of the pie. It’s taught in school. But the wealthy profit off the poor. Teachers can teach it, but it doesn’t sink in to kids until they actually have money on the line.

Hell, I went to business school and savings didn’t mean much to me because the American Dream is tomorrow you're going to make more than you do today. We wouldnt profit if we were all “savers”. Advertising and media and even the idea of “ our healthy economy “ is all about how much we’re consuming. It’s hard not to get caught up in it all, but only so many people at a time can get off the hamster wheel with out it slowing down.

 

[tiffanysgallery]

My parents, especially my Dad, taught me about financial independence and responsibility. My mother always had a budget, and my Dad wouldn't opened his wallet unless there was an emergency. Watching their habits and hearing their experiences must of worked, because I opened a 401K at age 18. lol.

 

[goshengirl]

We include Dave Ramsey's high school version of Financial Peace University as part of our children's education. They LOVE Dave. The 15 year old asks to listen to his radio program when we're in the car.

 

[musketjim]

We were close to set a few years back. Circumstances intervened. BOL is paid for but we'll never own the house. I have a 401k and a couple IRA's and my wife has an IRA. She is self employed and loves her job and I should be able to do mine forever. It's fun with lots of goof off time. I try not to count on SS, just trying to stay healthy and enjoy travel. I prep as best I can and hope 4 the best.