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It’s not a political question, but a practical one, especially for us retirees. Let’s see.
We survived a pandemic.
My wife and I have both had expensive health issues in the last four years for which we received excellent care and that were paid in full by Medicare and our Medigap insurance.
Inflation has been up and now going down – but at its highest a lot less troubling than in the 70s and 80s. Social Security was adjusted upward accordingly. Consider that the 1980 COLA was 14.3%. The 2022 COLA was 8.7%, 2025 is projected at 2.5% My main income, my pension is sans a COLA. I’ve lost over 40% in buying power since I retired, but I had a strategy to cope and still do – a cushion and other income sources as needed.
Gasoline prices were high, but have come down, and we had access to all the gas we wanted unlike in the 1970s when we waiting in lines.
Our investments have done very well. Our net worth is higher than four years ago.
We certainly aren’t worse off, and in many ways we are better off beyond any financial issues. We just saw our oldest grandchild off to the college of his choice knowing we are able to help in a small way – 10 more to go.
We spent most of the summer on Cape Code and recently entertained a friend from Paris whom we met as a tour guide many years ago. She brought us wine and cassoulet and we introduced her to lobster rolls.
We are not average though. We also have a longer perspective than many others. Hey, we bought three houses during our marriage and never paid an interest rate lower than 9-1/2%.
Our good fortune is appreciated, but our financial prudence, and planning – sometimes unconventional, sometimes criticized – helps smooth the way. I guess we are better off.
I am better off today compared to 2020 not because of public policy or party politics. I am better off today because I have worked hard my whole life and have been a steady saver and investor. I’ve had faith in American capitalism throughout my life, not just through the pandemic. I’ve built a portfolio of stocks (mainly index funds for mid-size and large companies) that reflect that faith.
That portfolio is now much more robust than it was in 2020. But it is more robust because it relies on the efforts of millions of people who work in the private sector and who want their businesses to succeed. I’ve shared in their success. And I wish them even better luck in the future. And I want everyone in this country to be able to share in that, too.
I like the fact that there are some regulatory guardrails that experience has shown to be necessary, and that tend not to interfere with the free market. Trust in the fundamental integrity of the stock market is essential. One can argue ad infinitum about what we should do with the taxing power, and the printing of new money that expands the deficit. But I would put a pox on anyone who thinks we need people to come in and comprehensively restructure and run our economy, many of whom have never spent real time struggling for success inside a competitive business.
A very good question with a wide range of answers.
Four years ago, I announced I would retire the following year. My wife & I purchased an RV to travel the world, (or the US anyway.) Our financial situation was good, but we still had a little debt to manage. Change was a constant as we prepared for the future, and everything was good.
During the four years, I retired, we sold the house and traveled in the RV full time for 2 years. The debts were all repaid, our investments grew, and we lived off investment income and Social Security. Our first grandson was born in 2021, and in 2023 we purchased a house just five blocks away. The changes continued, and we were feeling joy of the good life.
Three months after moving into the house, my wife passed. This was the testing change. Soon after, my second grandson was born. After meeting some people in my new community, I have started volunteering, the investments continue to grow, and I live off just Social Security. I have adjusted my will so that my grandsons will see just how well Grandpa did as an investor.
Life is still very good. I am debt free, and I own a home in a peaceful small town near my daughter and her family. In those regards I am much better off, but there is a hole in my heart that I cannot share the joy i have in my life with my wife. And change will continue.
Thanks for the question, Richard.
Today, I’m in the thick of some struggles with doctors office billing people and correcting state tax screw-ups, so pulling up and looking at some positive, long-term outcomes was helpful for me.
To directly answer your question strictly in financial terms: over the last 4 years my net worth has gone up %70, and going back 6 years since my father died, and left some money, it’s 175%.
To flesh out a few of the non-monetary contours, here are the one- or two-word comments I put on each year: Dad Died, Started [new company], RSUs Begin, Market Down, Retired, [wife] Cancer.
There were kids graduating college (one doctorate, one education degree, now teaching). There was a wedding. There were lots of trips and family events.
So, yeah, I guess I’m better off. But I’d rather have Dad than his money. I was much “richer” for the 5 years he spent living near us.
Life’s a mixed bag. Sometimes it’s good to look up from the current struggles to look at the big picture. Now, on to today’s struggles…
I’m better off financially today than I was four years ago, a blessing for sure. Those who have accumulated financial security and have invested well and eliminated debt are probably living in a similar bubble.
The majority of the population is struggling with debt and inflation.
In purely financial terms it’s easy to quantify – what’s one’s personal balance sheet, future liabilities and (realised) asset generating capacity etc.
In holistic terms I’d argue it’s almost impossible for anyone past early mid 20s to say yes because of the loss of human potential (or % of remaining lifespan). The precise point one tips into decline probably depends on how far off the rails you are in early adulthood. For some straight edged kids maybe it’s 16 or 18 or whatever.
It’s this human decline that feeds lots of politics. I believe that there are studies that the turn to the right in later life (and/or more xenophobic policies) is closely associated with resignation about increasing frailty/likely poorer health etc etc and a general feeling of increasing impotence and decreasing influence.
Decline? I’m 77, and I retired from full-time work in 2000 and part-time work in 2004, and I definitely don’t feel I have been in decline ever since. Far from it.
Four years ago was the height of the Covid pandemic, and since I was immunocompromised I spent my time home alone (I’m an introvert so it wasn’t a problem). Since then I have moved to a Continuing Care Retirement Community where I have made new friends and where I stay extremely busy. In that time I sold my house, using the proceeds to pay the entry fee to the CCRC. Meanwhile, the value of my portfolio has increased by 25% since the end of September 2020.
BTW, I have not “turned to the right” and I do not feel “resignation”.
Maybe we should stop looking to our politicians to have the answers and fend for ourselves.
What makes you think we are not already fending for ourselves?
I certainly feel that I am.
In theory, our politicians are supposed to be “ourselves”, but instead we have a political ruling class that never seems to be held accountable for their actions.
And yet, we seem to re-elect many year after year after year. I know one who been in Congress 30 years with no meaningful legislation containing his name, but he talks a lot.
That’s what I’m saying
Not to pick on Mr. Quinn in particular, but in this unique election season, I think the “better off than four years ago” question that comes up during every election is especially unfair this time, and to BOTH candidates. Four years ago, we were mired in a pandemic, and that had huge economic consequences. Trump had to deal with that in the last year of his term, and then Biden had to deal with it when he came into office. Were mistakes made? Sure, but these were unprecedented circumstances. For once I think we could cut some slack and look instead at what the future might hold.
Wholeheartedly agree.
I appreciate the sentiment, DrLefty, but I’m still bitter about what we did to our youth. Those politicians never should have shut down society like they did. It was one the most ridiculous overreactions in history. It was surreal to me what we did to ourselves. And the inflation was totally predictable. Every discussion I had with intelligent people agreed that we can’t give away money for nothin’ and not have rampant inflation. It was totally predictable by anyone with any sense. Rant over.
Good point. In fact, I will go further and say there is no time that most economic conditions can be blamed on the administration in office. First, there is a lag period in the effect of changes and second we are in such a global economy there is not much any person can control just for the US.
Inflation is coming down now and has been, but the next administration likely will get the credit. I see memes blaming the price of coffee and chocolate on the administration-in fact it’s the weather.
Simply looking back at various four year time periods and assigning blame or credit to whomever held the office of President is overly simplistic. I agree with your suggestion.
I’m better off financially because I have set myself up that way. I have a secure professional job due to my investments in education and training and I work hard and am a very valued employee. I have intelligently invested in the US and international equities and has steadily accrued in value over the years.
I am in a stable marriage and so no divorce history. I never had an alcohol or drug addiction and neither has my family. No mental illnesses either.
So I can say I am lucky and privileged.
I once read a book in the 70’s by an author whose book title was “ How I found freedom in an unfree world”. It is very politically incorrect in this sensitive culture now adays. But it has been a very influential book in my life. Look out for your best interests and don’t screw things up!
Emotionally: YES! I have more grandchildren!
Healthwise: No:-( more of the old body parts are having … issues
The question might be phrased too broadly. From a health standpoint neither of us is doing as well as we were four years ago, but this might be expected with aging. From a personal finance point of view, as folks who have been riding the index fund pony since retirement over 20 years ago, our net worth has never been higher.
When you get into quality of life or society, the ground is more shaky. And, politics is something I try to avoid at a site like HD.
Shall we opine on the weather? We expect another nice day today.
Unfortunately politics and business/investing crisscross all the time
Just looked at my quarterly net worth spreadsheet for September of 2020 and despite utilizing our portfolio assets to pay living expenses while delaying claiming social security our net worth is unchanged. I’d call that a win
A year ago a 30y mortgage averaged 7.55% now it is 6.50%. I never paid that low a rate buying three homes between 1970 and 1987.
Although interest rates were high in the 1970s and 1980s, home prices were a much smaller multiple of household yearly income then than they are today.
Well I can give one example that counters your point. Our first house was 52K in 1984 and I was the only one working making 15 K which is 3.46.
My son and his wife bought their first home for 350K in 2020 and she makes >100K (not sure what my son makes) which is 3.5.
Oh yeah, and my interest rate was 13.5%, his … 3.4%
Which mortgage is more affordable?
Oh, also we gave them 50K for a down payment. Our parents gave us exactly… $0.
Not a particularly convincing example. 15K in 1984 corresponds to 45K today with inflation taken into account. Your inflation-adjusted income was several times lower than your son and daughter’s current combined income. Look at average (or median) income versus average home prices back then as compared to today for a fairer comparison.
Maybe, unless you lived in a HCOL area like we did. Chris
The home price to median household income ratio was 3.63 in June 1973 and 7.16 in May 2024 even though there are more dual income households now than there were in the 1970s.
https://www.longtermtrends.net/home-price-median-annual-income-ratio/
What if you didn’t make the median amount in your county for 12 years like us? We just bought a smaller place, as I am guessing the young people do also today. Chris
Because price to income is a ratio, the ratio for those with smaller or larger than average income could be smaller or greater. Below is a link to home affordability since 1995 for the 25th, 50th and 75th percentiles.
https://dqydj.com/historical-home-affordability/
Thanks for referencing that article, parkslope, it was interesting and agreed with some of what I was trying to say about HCOL area. We bought our first home in ‘85 and I saw that timeframe was less affordable than the 1990s. The time after the Great Recession was spot on what our daughter experienced when they bought in ‘12 and we bought in ‘15. I was so thankful when we moved in late 1990s to a lower cost of living area. The funny thing was that houses in good school districts were not that much different, at least where we moved to. Chris
Our first mortgage in 1985 was 13.5%. Just looked and the historical average 30 year mortgage since 1971 is 7.71 percent. So right now rates at about 6 percent, or below average. We are not going back to 5 percent or below mortgages. I have told my son who has a 30 year mortgage rate of 3.5 percent he better hope he can never refinance at a lower rate, because if he can the country’s economy will be in big trouble.
To avoid politics, how about rolling 4 year periods for the last 24 years?
For me, with the exception of the years surrounding my divorce and the changing of occupations (which coincide with each other) I have been and am better off. We are also solidly middle class. Our success’s and challenges are all self inflicted, with no credit or blame assigned to any politician.
Planning and luck is what put us in a nice place.
During the 1970s while we were raising our family and bought our first and second homes the average annual inflation rate was 7.4% for the decade. Fond memories.
That was because of really bad government policy too.
Whether you disagree with me, your question seems to be politically charged. IMO, a lot of products and services cost more today than four years ago. Blame Powell or Biden? Take your pick. My son who just graduated from college still live with me because he can’t afford the rent at the apartment near his workplace with his current entry-level salary.
How easily we seem to forget all that has happened in the world in the last four years from the pandemic to Ukraine all effecting the supply or distribution of something. Americans saved at record levels and then started spending at high levels with supply not matching.
I get a kick out of some people now blaming politics on higher prices for chocolate and coffee as if politicians can now control the weather.
Always someone or something else to blame, always cause and affect to forget or ignore.
We are part of a global economy and that matters, but we Americans often forget that.
The 2021-22 bout of inflation resulted from demand outstripping supply. The supply problems stemmed, in part, from supply-chain disruptions caused by the pandemic. We can blame COVID for that. But who do we blame for too much demand? Obviously, in retrospect, it seems fiscal and monetary policy were too loose in 2020 and 2021. Both Democrats and Republicans controlled the executive and legislative branches at different times during that period. As I see it, when it comes to lax fiscal policy driving up inflation, there’s plenty of blame to go around.
But would a depression with long term (ie years long) job losses have been the result without the fiscal stimulus? A several year depression with millions of people unemployed would have been worse. I think a job with inflation is better than no income at all.
I agree. Yes, we had inflation but what we don’t know is what would have happened without the stimulus. Would we have slipped into a severe recession or depression? It is possible. There is nothing worse than not being able to find work.
I agree that fiscal and monetary stimulus were needed. But that doesn’t mean that, with the benefit of hindsight, fiscal and monetary policy weren’t too loose.
The complaint about the stimulus after the “Great Recession” was that it was too small. This time apparently people think it was too big. Maybe next time we’ll get it “just right”.
As Americans, will we ever stop kicking the can down the road?
Interesting question. In our case, I think we are better off in that Spouse was able to retire this year in their mid 60s when others may have to work longer. Our income has definitely taken a hit this year, but I think it does for most retirees? Our children are in their 30s and from what I can observe of their lives, they are better off than 4 years ago. Son was able to purchase first home before the interest rates went up and Daughter has done some major remodeling and refinanced to a 15 year mortgage while the rates were low. They did not do a cash out refi that I know of. Chris
Anyone who depends on an un-COLAed pension or annuity has taken it on the chin, I’m “fortunate” in having neither. Deciding to wait till 70 to take SS has proven to be a wise choice for me as was keeping a reasonably healthy allocation to stocks.
On the other hand, many are not as fortunate and the “wealth divide” and economic precariousness for so many has only been made worse over the last four years which has translated into an even more rancid political situation. So, while I may be better off economically than four years ago, I certainly don’t feel better about the general state of things than I did four years ago.
It seems to me those of us fortunate to have a pension even without a COLA have nothing to complain about. It’s not that inflation was never going to happen or prices were not going up.
We knew or should have that we needed a plan to deal with all that. In some respects the lower income seniors mostly living on SS are better protected from inflation.
I worked to nearly age 67 to meet my goals for future security. I can’t imagine those who voluntarily retired in their 50s having any complaints about the COL. That was always a given and a known risk factor.
No doubt HD readers have found ways to cope with inflation, even the 4% (or any percent) withdrawal method deals with it.
It was several years after I moved here before I realized that my pension did not have a COLA. Working for the same company in the UK my pension did have a COLA. In fact, the very small part of my pension paid by the UK part of the company has a COLA to this day. So, yes, I am annoyed that my US pension doesn’t have a COLA.
The only pensions that can afford COLAS are taxpayer funded public pension. When I added a ad hoc COLA to a plan it added many millions to funding and the next time compounded, etc.
They are just an expensive risk few plans in the past could afford.
My husband and I both have Wisconsin state pension. No COLA. BUT as retirees, we do share in the investment results of the Employee Investment Fund. We both retired in 1975. Our pensions have more than kept up with inflation since then.
Can taxpayers really afford public pensions? Here in NH the state pension plan (that also includes town and teachers pensions) have resulted in skyrocketing real estate taxes.
Funny. UK companies managed it.
Not so much for a long while. If you joined pre 2000 you maybe got something that scraped into the 2010s before turning DC but DC has been the route of choice for many since sound 1990.
Is this not true?
All employers must offer a workplace pension scheme by law in the UK. You, your employer and the government pay into your pension.
It’s far different than the US where most defined benefit pension were non-contributory and no government money.
Many with a COLA – govt. plans – are contributory.
I suspect everyone reading this forum is better off. It’s young people and the middle class taking it on the chin. My five children are all in their twenties and struggling to afford housing, transportation, insurance, and food.
This was the same for my wife and I when we were in our late twenties, both working, and dealing with a mortgage and child care for two children. Those were all our choices. We lived frugally (only big vacation until our sixties was a trip to Disneyland for our children which we saved pay from extra work for years, and even had a savings bar graph goal chart for them to show progress) paid the bills (including our school loans which were a large percentage of our budget), saved what little we could, increased our savings as we received raises.
We didn’t complain, we just put our heads down and did what we had to do. We didn’t ask the government to pay off our loans, we signed the contracts, it was our responsibility to fulfill them.
We are now well off early retirees, and we did it mostly on our own with hard work and sacrifice. Somehow people nowadays think it was all so easy for our generation.
Balancing life when you are young is tough.
My children are in their fifties. Two are working two jobs to pay all the bills, including all the sports and activity related costs for children. Neither wife has been able to work because of illness. You do what you have to do.
I see things no worse today than in the past with the ups and downs, inflation, stock market, overall economy.
Didn’t you struggle in your 20s, even 30s I know we did, no extra money for anything but basics, including what we could spend on a house.
Not that I remember. Initially, I was single and renting. After I moved to the US and married a man raising his kids from his first marriage we both worked, at well-paid jobs.
Sure.
I think the question to ask is “who has a better financial situation, 25 year-olds today, or 25 year-olds four years ago?” It was definitely better for young people four years ago.
As an unmarried engineer who was content to rent an apartment (at $350 a month), I have to say I didn’t struggle financially when I was 25. The cost of shelter for those starting out has increased considerably since those days, while availability has diminished. Health insurance costs have also moved significantly in the wrong direction. Edit: This should have been a reply to Dick, not Matt.
Are you sure? Four years ago, COVID was still raging, vaccines weren’t yet available and the economy was still recovering from the spring shutdown.
I thought somebody might catch that. It’s a good point, but remote jobs were plentiful, wages were rising. Of course it was just the pre-curser to the inflation bomb which was still to come. So yes, it was better for them four years ago, but pre-COVID was even better I suppose.
Yup.
Financially, sure. Net worth is up well over 40% from January, 2020. Inflation was up by 21.6% over that time period.