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My Retirement Plan

Although the "cruise ship" recounting has become the more widespread, the earlier form taken by this piece of e-lore featured not a luxury liner but a hotel. In 2003 this waggish diatribe against the cost of nursing home care had its writer swearing to check into a Holiday Inn when the grey hairs became too many. By 2004, some of the numbered items now found in the "cruise ship" tale were in place, albeit in a version that claimed
Holiday Inn rather than Princess as substitute elder care housing (e.g., "TV broken? Light bulb need changing? Need to have the mattress replaced? No problem! They will fix everything and apologize for your inconvenience"). By 2005 more numbered items had been added, including some cruise-specific ones (e.g., "There is always a doctor on board" and "And don't forget, when you die, they just dump you over the side at no charge").

Also by 2005, what had begun as one writer's claim about his or her fanciful future plans had come to be presented as the actual remarks of an old woman living that life on a cruise ship. It is at this intersection that folklore and reality: while the account of the "elderly lady" has clearly evolved from earlier pieces about pie-in-the-sky retirement plans involving Holiday Inn, some people of advanced years have indeed made their homes on cruise ships.

Bea Muller, an 86-year-old retiree, took up residence on Cunard's Queen Elizabeth 2 on 5 January 2000. Her husband had passed away while the couple was on a world cruise eleven months earlier, and rather than opt for a retirement home, Mrs. Muller sold her house and possessions and booked herself onto the ship.

Instead of submitting a monthly or yearly fee, in 2001 Muller was reported to be paying as she went, booking one cruise after another. Thanks to her frequent traveler discounts, her overall costs amounted to about $5,000 a month. (Cruise prices have increased since then, which is something those entertaining similar plans should Cruise ship keep in mind. Also, Muller's accommodations were small and windowless: a 10x10 foot cabin that barely fits a bed, radio, and television, with a bathroom smaller than the average closet found in a typical home.)

Its cramped quarters aside, Muller was happy with her life aboard a ship. "I've got full-time maid service, great dining rooms, doctors, medical center (where she volunteers), a spa, beauty salon, computer center, entertainment, cultural activities and, best of all, dancing and bridge." (Muller passed away in 2013, and the Queen Elizabeth 2 was retired from service in 2008.)

Bea Muller was not the first long-time cruiser: Cunard had a previous guest, Clair MacBeth, who lived aboard ship for 14 years.

As to whether living out one's golden years aboard a cruise ship is a viable alternative to spending them in a retirement home, a geriatrician at Northwestern University says such a plan is a feasible and cost-effective alternative to assisted-living facilities. Dr. Lee Lindquist, an instructor at Northwestern's Feinberg School of Medicine, compared the costs (over a 20-year life expectancy) of moving to an assisted-living facility, a nursing home and a cruise ship, including the expense of treating acute illnesses, Medicare reimbursement and other factors. She determined that the net cost of cruise-ship living was only about $2,000 more than the alternatives ($230,000 versus $228,000) and offered a higher quality of service.

"Cruise ships offer such a range of amenities — such as three meals a day, often with escorts to meals if needed, room service, entertainment, accessible halls and cabins, housekeeping and laundry services and physicians on board — that they could actually be considered a floating assisted-living facility," says Lindquist.

Lindquist says the plan would work best for seniors who need a minimal amount of care. "Seniors who enjoy travel, have good or excellent cognitive function but require some assistance with activities of daily living are the ideal candidates for cruise-ship care. Just as with assisted living, if residents became acutely ill or got to the point that they needed a higher level of care, they would have to leave."

Although Lindquist's findings would seem to support the premise of it being cheaper to live on a luxury liner than in a retirement home, we'd want to examine her research vis-a-vis the types of care facilities she looked at and the cruise-ship costs she factored in before we'd feel comfortable about offering an opinion on her assessment. (She might have compared only very expensive retirement homes against the cheapest accommodations offered on ships that are less than well thought of, for example.)

However, whatever the validity of Lindquist's findings, cost is but one of the elements to the choice of where to reside after retirement. Golden agers who decide to make their permanent homes on cruise ships sacrifice proximity to family and friends; their nearest and dearest are no longer just a short car ride away. Those devoted to their children and grandchildren might well deem that too high a price to pay, no matter what the spreadsheet says about the relative financial costs. Likewise, those who lack progeny but who are involved in their communities or who are part of a number of strong friendships may not want to opt for the vagabond life, because it would mean abandoning that which gives them joy.

Also, life on a cruise ship means one acquaintance after another, but no permanent ongoing connections of any depth. Fellow passengers disembark to return to their regular lives at the termination of their one- or two-week holidays, which means friendships struck up with them land in the "We'll keep in touch" bin very quickly. As for staff, while serial cruisers can strike up deeply affable relationships with some of the line's employees, these rapports are inherently limited by their very nature: no matter how close such associations appear to be, ships' employees are required to be deferential to paying passengers, so the friendship-critical element of honesty can never be part of such dealings. Making a cruise ship one's permanent address, therefore, will not be for everyone. While those at ease with a steady diet of the superficial will thrive, those who require the comfort of at least a few real friendships will likely feel lonely even though they live among crowds.

I feel her on that decision. Cruise ships are filled with new people, excitement, and seeing different places....the exact opposite of a retirement home.

I get that not every retirement home is the same, but the horror stories we hear all the time about the way the elderly gets treated? obvious that it's a pretty common practice.

And hey, why not use the money you get monthly on something exciting?

My wife and I met a women in her late 60's on a cruise, who said she had been cruising for the past 3 years continuously. She moves from ship to ship, and tries to route her trips to ports near family. Then disembarks for a week or so to visit, before jumping on the next one.

She said she will continue to do it as long as she is able to be self sufficient. The food is good, constant entertainment, and always meeting new people.

She had a list of people who cruised often that she stayed in contact with and would try to plan cruises at the same time.

Gotta say, it sounds a lot better than sitting in a retirement home watching TV and playing BINGO.

Diversity. That's why I'm taking Advanced Domino Theory at the local JuCo.

I've been retired going on 4 years now and I can sum it up with a song...

https://www.youtube.com/watch?v=El9eCRisbDo

I could see you listening to trap music when you find free time by yourself.

I thought you were loaded and even had a gardner? No?

Swish is loaded also. He's flush with cash.

I'm one of the dumbasses that keeps plugging away trying to not get a head, but just stay even.

So was I once and I just kept on plugging away. Respect.

Ditto that 40' . Fourth year for me also. And I'm sure I could find a song if I had the energy to do so at this moment....

Congrats BB!

I didn't even know Lee Marvin could sing and guess what?
He can't!

I've always stacked my bread since forever. Growing up as a teen poor taught me that.

Congrats are mutual, 40'. I did karaoke occassonally for fun, but my voice made Bob Seger's sound like honey...lol

Funny I thought this was more your style.

Good Gravy!

http://www.retirementwave.com/panamashort.htm

We are planning on getting a place in Panama. We won't stay year round at first but we plan on getting citizenship there for the eventual full time move in ...if all works out.

As long as you never get on the SS Norovirus, it sounds like a blast.

BTW, the SS Norovirus is a blast too, just a different kind of blast.

I've had the Norovirus. It's no joke. I won't go into detail but let's just say it really helps to have a second bathroom. Yikes.

As to this article and such. The system in this country is set up for what I call 'inheritance removal'. Basically you get old. Sell your house. Take all the money you've saved your entire life and hand it to a for profit corporation/assisted living/nursing home to the tune of $4000-9000 a month. Until you run out. Then you go on Medicare (socialized medicine) and we all foot the bill. Meanwhile your kids get nothing.
I see this repeat itself every day. But hey, who needs socialized medicine until the very end when you've got less than $2000 to your name?...
This is very real!

13 Reasons Why Your 401(k) Is Your Riskiest Investment

The 401(k) is often considered the no-brainer, gold standard of retirement plans. But far from being a bedrock retirement plan, the 401(k) started as an experiment in 1981 and still has to prove itself.

Those who decided to be a 401(k) lab rat in the first test group are just starting to get back their results. After 30-plus years of faithfully funding their new retirement plan, it's time to retire. As you'll see, the last 15 years have not been kind to them, but that should have been no surprise. The supposedly dependable 401(k) is not your best choice for retirement. Not by a long shot.

I've worked with hundreds of professionals. Most of them diligently saved in a 401(k), but once I explain the risks, they're eager for alternatives. Here are 13 dangers of a 401(k) for you to consider.

1. You can be wiped out overnight.
A report on CBS's 60 Minutes TV show asked of 401(k)s, "What kind of retirement plan allows millions of people to lose 30-50 percent of their life savings just as they near retirement?"

Good question.

Unlike other investments that are protected from losses, your 401(k) rises and falls with the stock market where you have absolutely no control. Retirement planners will tell you the market averages 8-11 percent returns per year. That may have been true last century, but this century has seen that turned into a fiction. From 2000 to 2015, the market was up just 8.4 percent total when adjusted for inflation, or 0.56 percent per year, and that was after a substantial market rally.

Do you want to live your ideal life only if the market cooperates?

2. Administrative fees and the tyranny of compounding costs.
The toll taken by 401(k) and associated mutual fund fees is staggering, and can eat up more than half your gains. With 401(k)s, there are usually more than a dozen undisclosed fees: legal fees, trustee fees, transaction fees, stewardship fees, bookkeeping fees, finder fees and more.

But that's just the beginning. The mutual funds inside 401(k)s often take a 2 percent fee off the top. If a fund is up 7 percent for the year, they take 2 percent and you get 5 percent. It sounds like you're getting more, right? At first, yes, but in the end the mutual fund wins.

As Jack Bogle, the founder of Vanguard explains it, "What happens in the fund business is the magic of compound returns is overwhelmed by the tyranny of compound costs."

If you contribute $5,000 per year, from 25 years old to 65, and the fund goes up 7 percent every year, your money would turn into around $1,143,000. Yet, you'd only get to keep $669,400, or less than 60 percent. That's because 7 percent compounding returns hundreds of thousands more than a 5 percent compounding return, and none of it goes to you. The 2 percent fee cuts the return exponentially. In the example above, by the time you turn 75 the mutual fund may have taken two-thirds of your gains.

Bogle puts it like this, "Do you really want to invest in a system where you put up 100 percent of the capital, you take 100 percent of the risk, and you get 30 percent of the return?"

Related: Going Solo Doesn't Mean Going Without a 401(k)

3. There's no cash flow for better opportunities.
The theory behind 401(k)s is you keep putting money away, where you can't easily touch it without penalty for 30 years, and it will compound into enough to retire on. We've seen why you should be suspicious of that story. Compounding charts don't look the same at 0.56 percent annual returns.

But here's the other problem. Money left to compound unpredictably for 30 years is stagnant money.There's no cash flow ready to direct to today's best uses. Instead, it's sitting still inside one 30-year bet, while newer, better opportunities may be passing you by.

4. Lack of liquidity when you need it most.
Money in a 401(k) is tied up with penalties for early withdrawal unless you know how to safely navigate obscure IRS codes. This means you can't spend or invest your money to enrich your life without great difficulty and/or taking a big financial hit. The only exception allows you to borrow a limited amount of money from your 401(k) if you promise to pay it back.

This automatically leads to double taxation and a slew of other negatives, the worst being if you lose your job or your income dries up, the deal changes and you must repay the loan within 60 days. Not even break-your-thumb loan sharks are that cruel.

5. Lack of knowledge encourages unconscious investing.
With 401(k)s, I've seen environmentalists who are unknowingly invested in big oil, and anti-smoking advocates invested in big tobacco. Simply put, 401(k)s teach people to be unconscious while investing.

Think about it, how much do you really know about your 401(k)? Do you know the funds in which you're invested? Do you know the details of the companies inside those funds? Do you know the fund manager's philosophy, history, and performance?

Probably not, How can you expect to gain a return from something that you know so little about? And how can this be called investing? It's not investing, it's gambling.

6. Fear of taxes leads to underutilization.
401(k)s are tax-deferred, meaning you avoid paying taxes today by committing to paying them later. But taxes are historically low compared to the days of 50, 60, or even 90 percent marginal rates of the past and chances are, with record national debt, that taxes are going up. If you don't like paying taxes today, why would you want to pay more taxes in the future?

The tax deferral aspect of the 401(k), which is touted as a great boon, is actually a primary factor contributing to its underutilization. When the time finally comes to enjoy or live off the money, retirees are incentivized to let the money sit for fear of triggering burdensome tax consequences.

Related: The 25 Best Companies for Employee Compensation and Benefits

7. Higher tax brackets upon withdrawal.
It's ironic that people anticipate that they'll have healthy returns on their qualified plan while at the same time figuring they'll be in a lower tax bracket at retirement. If you have achieved any measure of success, you should actually be in a higher tax bracket at retirement. Most advisors, however, assume the opposite. Even worse, those higher tax brackets are likely to be even higher and more daunting in the future.

8. No exit strategy.
Early withdrawal penalties, over-the-top borrowing rules, daunting taxes, these are all incentives never to touch the money, ever. Getting into a 401(k) seems simple enough. But how are you going to get your money out of it?

9. 401(k)s are easy targets for estate taxes.
Frankly, 401(k)s are sitting ducks for predatory estate taxes. Since there's no clear exit strategy without major penalties or taxes, at the end of a person's lifetime their 401(k)s often end up being a pile of cash that looks very tempting to the government. When it is passed on to the next generation, it's likely not only hit by the income tax, but the estate tax as well.

10. The government owns your 401(k) and can change the rules at will.
You may be surprised to learn this, but your 401(k) does not even technically belong to you. Read the fine print and you will find "FBO" (For Benefit Of). The tax code makes it technically owned by the government, but provided for your benefit.

Judging from world history, 401(k)s could be in great jeopardy. Other countries have raided private retirement plans to fund the government. Argentina did it in 2008, Hungary did it in 2010 and Ireland in 2011. Similar pension raids occurred in Poland and France.

Could it happen in America? Well, during the last recession, Congress invited an expert to give testimony on confiscating 401(k)s and turning them into a public retirement plan like Social Security. It only takes one economic crisis before you retire for possible rule changes or confiscation of your 401(k).

Related: 4 Obstacles to Early Retirement and How to Overcome Them

11. Turmoil in retirement.
When it comes time to withdraw money in retirement, maybe you can stomach the taxes, but can you stomach the market swings? Suppose you've projected to withdraw 6 percent a year, based on an average annual return of 8 percent. What will you do when the market is volatile?

If your fund is down 10 percent one year, any withdrawal is tapping into your principal. At that point, your only choices are start withdrawing principal, or leave the money alone until your account is up again. Try sleeping at night when your income is at the complete mercy of the markets.

12. Lost without a comprehensive plan.
I've witnessed many people whose finances are in shambles, yet who continue to contribute diligently to their 401(k) plans. It's like someone with a slit wrist tending to a scraped knee.

You need a macroeconomic, big-picture plan that identifies, prioritizes and manages all pieces of your financial puzzle in harmony with each other. You don't need a general, one-size-fits-all plan that's sold to everyone.

13. Neglect of stewardship and responsibility.
401(k) plans encourage people to give up responsibility for their investment decisions. They believe they can just throw enough money at the "experts" and, somehow, 30 years later, they'll end up with a lot of money. Then when things don't turn out that way, they blame others. A true financial plan requires stewardship and responsibility.

In short, saving for retirement is wise and prudent. But other investment philosophies, products and strategies can meet your financial objectives much more quickly and safely than a 401(k). Investing for cash flow, or investing directly in a business, or Cash Flow Banking, where you become your own "bank," could be smarter moves. Even paying off a high interest rate loan can be a smarter move than contributing to your 401(k).

Whatever you choose, I urge you to do it as a conscious investor. I suggest that you don't swallow Wall Street's promises blindly, and look to those who tell the whole truth about your financial options.

The 401K plan at work was a great vehicle for me to make money over the years. It is a must that you educate yourself in the markets if you are going to invest in them tho. I knew a lot of people who knew nothing and ended up with next to nothing.

My job matched everything I put into my 401K up to 6% of my salary so it would have been foolish not to take their money. Even if you threw it into treasuries to keep it safe at low interest rates, it was free money.

I got lucky by paying attention and saw the 2008 crash coming thanks to Peter Shift and moved everything to treasures just before the crash.
Once things bottomed, I began buying everything back at a huge discount. Lots of money made on that one!

I could borrow up to 40% of my 401K and pay it back over time. I borrowed the entire 40%, bought Gold at $400-$600 per ounce and started selling it when it hit $1,700 per ounce. It went as high as $1,900 per ounce and then began to drop to today's price of $1,100+.
Paid back my 401K and pocketed the rest.

A like minded friend of mine mortgaged his house and maxed out all his credit cards as well as borrowing from his 401K to buy Gold. I called him Nuts, today I call him Sir.

Oh yea, that Peter Shift guy was on CNBC in 2007 trying to warn everyone of the coming housing collapse and Great Recession to follow and the group laughed him out of the room! Some even suggested he was a big believer in Santa Clause! There is a vid on the internet showing this meeting/interview.

He who laughs last, laughs best. Thank you Peter.

I would suggest that those approaching retirement mane allocation changes in how their funds are distributed.

I would get into some really safe vehicles, like cash, because I feel a huge, huge market correction approaching.

Take it for whatever it's worth. I think that the market will tank again, before the time the next President takes office.

Edit to add:

Look at what the markets did in the final years of the Clinton and Bush administrations. Beware. Don't get caught in a downturn where you are unable to determine how your funds are used.

The average American made $44.6K last year


Americans' wallets got fatter in 2014 than the year before, though the biggest gains may be filtering to the top.

The average American took in $44,569.20 last year, according to data released Tuesday by the Social Security Administration. It marks an increase of 3.5 percent from 2013.

Still, 67 percent of wage earners made less than or equal to the average. Median compensation came in at $28,851.21 for the year, up from $28,031.02 in 2013.

http://www.cnbc.com/2015/10/20/the-average-american-made-446k-last-year.html

link

After-tax corporate profits in 2013 rose to a record of 10 prcent of gross domestic product, while total compensation of employees slipped to a 65 year low. Corporate taxes - under 20% of pretax corporate income in three of the last five years - have not been that low since Herbert Hoover was president. During the Obama administration, profits have taken a higher share of national income than during any administration since 1929.

A new study from WealthInsight, the London-based wealth-research and data firm (and yes, they are non-partisan), showed that the United States added 1.1 million millionaires between Jan. 1, 2009 and the end of 2011, the latest period measured. There were 5.1 million millionaires in America at the end of 2011, compared with around 4 million at the end of 2008.

That works out to more than 1,000 millionaires a day under the Obama administration. (They defined millionaires as people with total net worth of $1 million or more, excluding primary residence).
http://www.cnbc.com/id/49696601

1 million equals 0.001 of 1 billion.

Very good.

I understand how you could be confused.

Using a stat about the number of millionaires increasing means nothing when that stat is compared to how the middle class' spending power has minimally changed. Plus when you compare the amount of nation/world's wealth controlled by billionaires to new millionaires it means nothing.

I hope that helped you to understand better.

Don't need to concern myself with that many zeros. I'm currently working in 6 figures. To get into 7 figues, I'd have to win a lottery and my odds of doing that extend into 8 (or more) figures...

I was confused to, since there was no mention of billion until you brought it up AFTER his reply about millionaires, and you gave no comment of why you gave us the mathematics of a billion vs a million.

No no, Please guys, It was me who was confused.

Kinda like I was wondering why he mentioned millionaires in response to my post comparing dropping employee compensation to the lowest rate of corporate tax since Hoover.

My guess is that since the thread was evolving into a retirement income, investments and lifestyle thread, he posted how, even during the recession, there were still folks who became millionaires.

And with a little extrapolation, one could presume they did that through investments of some sort.

So I guess I quickly saw his connection, even though it wasn't outwardly apparent.

Keep trying and perhaps after 5-7 more posts you will finally
have one decent post that is not confusing.

Luck!

So he wasn't responding to my post at all?

Gee, not only am I confused but I'm invisible too!

Sometimes that's the best possible scenario.