Thursday, March 24, 2011

Thursday's WTF's.

A couple of years ago, whenever anyone talked about buying a house in Bend, I'd say, "Wait a couple of years. Wait a couple of years."

Not that anyone listened.

I stopped saying it, awhile back. (Giving advice is risky; I'd hate anyone to take my advice if it was wrong...)

But it looks today like I could still say, "Wait a couple of years..." and not be too far off the mark...

Housing vacancies are roughly double in Bend from ten years ago.

No rush, folks.


I finally dealt with the sleep disruption of Daylight Savings Time by ignoring that it happened. Instead of going to bed around midnight and getting up at 7:30 or 8:00, I stay up until 1:00 and get up until 8:30 or 9:00. An hour more reading at night, an hour less internet-tubing in the morning.


Fortunately, my brother-in-law ignored the above advice and bought a second home in Mt. Bachelor Village, which means the entire family has a place to come for gathering. All my sibs are coming this weekend. We'll scoop up the patriarch, Dad, and have a wild weekend.


H.Bruce came in to look at the Droplets, which -- I hate to say -- weren't quite as cool as I thought they'd be. But I showed him my favorite figures -- the Potamusses. (Potamii ?) and he bought the last two in stock.

(Little brightly colored hippo's with attitudes....)

He got a green one (Enviro Potamuss?) and a black one with an Anarky symbol.

(Linda says, are you sure he wants everyone to know he's got Potamii? )

I'll risk it.


I had a twelve year old girl in yesterday who didn't know who Marilyn Monroe was.

O.K. I can accept a certain amount of cultural illiteracy; if you talk about Presidents, you should know about Washington, Lincoln, Jefferson, Roosevelts I and II; I'll forgive you Jame Buchanan.

If you're talking about music, you should know about Beethoven, Bach, Mozart, Beatles, Elvis; I'll forgive you if you don't know about Rachmaninoff and Little Richard.

If you're talking about Historical Figures, you should know about Napoleon, Caesar, Gandhi, Churchill; I'll forgive you, Hannibal and Attila the Hun.

If you're talking about Hollywood, you should know about Humphrey Bogart, Marilyn Monroe, John Wayne; I'll forgive you Rita Hayworth and Ava Gardner.

Here's list compiled in 2009, of the top ten cultural icons of the last 50 years. Agree or disagree, (they seem skewed to recent deaths....) you should at least know who they are...

10. Paul Newman
9. Princess Diana
8. The Beatles
7. Oprah Winfrey
6. Mohammad Ali
5. Micheal Jackson
4. Marilyn Monroe
3. Frank Sinatra
2. Madonna
1. Elvis.

Bone up, kids. Or miss all the little references and in jokes for the rest of your life.


On a regular basis, the news media will print an article about some financially struggling family.
I'd feel sympathetic until they'd give the details of income and benefits and the help they are receiving, and often I'd realize they had more money than I did!

I had a similar reaction to the near-retirement couple in the Bulletin today. They have 720K in savings, own a house worth 500K and they live modestly and intend to keep working part-time, at least.

For Gods Sake. Most of the U.S. would kill for that level of retirement; much less the world.



RDC said...


The article was not about someone that is financially struggling. No where in the article did they imply that they were struggling.

The article was more about the choices they faced and just how major the decision of when to retire is.

Duncan McGeary said...

Yes, but that were oh so anxious and concerned...heh.

Duncan McGeary said...

I mean, "they" were so anxious...

The tone of the article made it sound like they were barely scraping by...

RDC said...

The article should make people think from the point of view of just how much money ones needs to fund a retirement.

Basically a good number (If one does not want to exhaust their savings prior to death) for tappings ones savings in retirement is 4% per year and then adjust each future year up by inflation. So if inflation is 3% the second year draw would be 4.12%, third 4.24%, and so on.

So if you need $40,000 in addition to social security you would need atleast $1,000,000 in savings. Actually more depending upon where that money sits and the amount of taxes paid on withdrawal.

It was much simplier when people were only expected to live to 70 or so, instead of current life expectency.

RDC said...

Bottom line is they do not have enough to maintain their pre-retirement lifestyle.

Duncan McGeary said...

Well, since they don't tell us what that is -- a pertinent point that a competent journalist might want to tell us -- we don't know.

But they MAKE it sound like they live will below their means; old cars, paid off house, etc.

So, come on, really.

RDC said...

The article implied that they have been very frugal. That is actually how people acquire and maintain wealth, living below their means.

After all if one is living at their means they are spending everything they are making and not accumulating.

At their savings and income level, they certainly will be living below their current standard of living and will be driving older cars (note that driving an older car is not a bad thing. I tend to be doing quite well by most measures and I drive a 9 year old car and have no intention of buying a new one for a few more years)

Duncan McGeary said...

Yes, and if they keep living that way, they'll be fine.

Moving to Canada is probably a great idea; buying a motel, not so much.

Anonymous said...

The Perils of Punditry: Libya Edition
TIME (blog) - Joe Klein - ‎10 hours ago‎
This post is about an act of war by the USA in Libya. He's kept GWBs entire defense team. He's kept everyone of his national security policies. He's changed nothing in Iraq and copied the surge in Afghanistan. Obama has endorsed Bush in a way that is ...

shopping monkey said...

I had a twelve year old girl in yesterday who didn't know who Marilyn Monroe was.

Had a young woman (20-25ish?) in our shop not too long ago who hadn't heard of Cary Grant. I nearly did a spit take on that one. I mean, come on girls, he is the man! Definitely a shortage of cultural education...

Anonymous said...

Two high-profile reports on home sales this week confirmed that the housing market is still mired in a deep slump with prices still falling and sales activity sluggish at best. In fact, the market may be in much worse shape than even those numbers suggest.

Figures from the National Association of Realtors that are among the most closely watched indicators on the housing market have been called into question by economists who say they may overstate existing-home sales activity by up to 20 percent.

Home sale velocity is based on the number of months to sell a home. Things are much, much worse than NAR is letting on.

25% of USA homes are said to be under water.

H. Bruce Miller said...

"So if you need $40,000 in addition to social security you would need at least $1,000,000 in savings."

By simply drawing out $40,000 a year from $1M in savings you would take 25 years to empty your nest egg. (Obviously if your savings/investments are earning any return it would take longer.) So if you retire at 66 (full retirement age for Social Security) you would be 91 by the time your nest egg was all gone. If you wait until age 70 you would be 95 by the time your savings were gone. Few people who are at or near retirement age now will reach their 90s. (Average life expectancy at age 65 currently is 18.6 years, according to the CDC.)

So unless you have reason to expect to live a long, long, LONG time, or unless you are concerned about leaving a legacy to your kids, a million dollars seems like a very reasonable, even generous, amount of savings.

RDC said...

You are not accounting for inflation and taxes. To maintain 40k from an IRA yo need to withdraw 50K (assuming 25% state and federal) now with inflation of 3% and you estimate 7% return on your investment.

50K at year one is 67K at year 10
and 90k at year 20.

So yes you can hold your withdrawal to the original amount but by year 20 it was like you were trying to live on 18k at the start. A slow decent to the poverty level. You run out of cash at 36 years. Now you might say that you are not likely to live to 100, but then again 35 years ago how many people would have expected to live to 85 to 90.

This is even if you have no major crises that requires you to hit your savings such as a medical crises or a major stock market hit.

If the inflation rate is 1% higher at a still low 4%. you would run out of money at year 29.

Duncan McGeary said...

This couple is in the top 5 percentile in net worth, RDC.

Why can't the media pick a more representative example?

I'll save more worries for the other 95% of the populous.

H. Bruce Miller said...

"Now you might say that you are not likely to live to 100, but then again 35 years ago how many people would have expected to live to 85 to 90."

I could look up the actual numbers on what life expectancy at age 65 was 35 years ago, but I don't feel like taking the trouble. I know, however, that life expectancy post-65 has not increased dramatically over the past 30 or 40 years. (Overall life expectancy has, but that's because of much lower rates of infant mortality and death from childhood diseases that are now preventable or curable.)

And most people still are not living to 85 or 90.

You're right that I didn't take inflation into account. OTOH you didn't take into account the fact that people tend to scale back their lifestyle and expenses as they get older, and not always out of necessity. My wife and I find as we get older that we're less and less interested in acquiring "stuff." I believe we could easily live on half our current income without giving up anything we need, or even anything we really want.

As for my personal retirement plan, I'm going to put everything I've got into Potami.

RDC said...

Some scale it back, some do not. Those that scale back tend to do so because they have to. Either because they cannot afford to maintain or because of ill health which has its own corresponding costs.

I don't know many people that saying that they are planning to chop back their spending when they hit 70 or 80.

RDC said...

Let's look at longevity. Someone born in 1942 could expect of 68. Now considering that those numbers inlude death from all causes at any age. If someone is 65 today they can expect to live another 18.4 years to 83.4. Keep in mind 83.4 is the median number.

RDC said...

median for a 65 year old has increased from 81.4 in 1980 to 83.4 today.

RDC said...

The real item in the number of those alive past 90. In 2000 it was 1449811 in. 2010 it was 1968264 in the us. a 35 percent increase in 10 years.

RDC said...


Something has changed and you can nolonger access comments without cookies enabled. So I have to use my phone instead my pc.

H. Bruce Miller said...

"median for a 65 year old has increased from 81.4 in 1980 to 83.4 today."

That's a two-year increase in 30 years -- not very impressive.

Medicine has made great strides over the past 40 years in keeping people with serious chronic diseases alive (look at Dick Cheney for one bizarre example). But we may be reaching the limits of what medical technology can do in that area. And I think we also are starting to ask ourselves whether, in some of these cases, we are just prolonging death instead of extending life -- and whether it's worth it.

RDC said...


Again that is a median figure. If you look at the number of people living beyond 90 that number has increased 35% in just the last 10 years.

The point is that one needs to plan their retirement so they don't run out of money and can support their lifestyle. That means that you need to plan that you will live past the median life expectancy for a 65 year old which is over 83.4. Statistically if a married couple lives retires at 65 there is a 50% change that one of them will live to 91.

Now a 4% initial draw gives you a pretty good chance of not running out and being able to handle a crises or two along the way, but even with a million in the bank it is not the lifestyle of the rich and famous.