Don’t outlive your retirement money

by Rhett

Changes are likely that will allow deferred income annuities to be held in IRAs. Thoughts?

How to Make Your Money Last as Long as You Do

And a calculator.

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185 thoughts on “Don’t outlive your retirement money

  1. Ok, maybe I **think** I’m smarter than the average bear, but I’m not too hot on the idea of purchasing annuities. (This might change depending on what Congress does to Social Security benefits.) We’re, that’s all of us, already going to have a base amount of our monthly income annuitized for us via SS; do we really need more?

    There is one popular retirement asset approach: the bucket approach. Essentially, near term (1-3 or 5 yrs) needs are in cash/cds; middle term (3-7 or 10 years) needs are in conservative assets like short/intermediate bonds/bond funds, maybe 20-40% equities; long term (7+ or 10+ years) are in quality, preferably dividend paying, equities. Easy to do without tax implications if in a tax deferred account. As each year passes, roll forward 1 year’s needs from each of the later two buckets.

    Mostly I am against the idea of paying a pretty fair chunk of my hard earned assets to e.g. Fidelity with some probability of not getting “my money’s worth”. I’d rather hold it myself and be certain if we die before something like age 93 our kids can fight over it.

  2. I’m thinking about this in terms what will provide the most comfortable and stress free retirement. Fred might say one of the annuity products mentioned isn’t worth it because you can manage your money to last at less cost. However, Meme has mentioned that having $1 million at 65 and having an $3300 a month pension, while theoretically the same, doesn’t result in the same sense of spending freedom and lack of stress.

  3. Fred,

    I’m thinking more that if you have to sell some SPY or PIMCO to go on a Viking River Cruise you’ll be much less likely to do that than if you have an extra $4k in the checking account due to your annuity payments being higher than your expenses.

    near term (1-3 or 5 yrs) needs are in cash/cds;

    I can’t imagine that if 2048 is like 2008 you’ll be comfortable taking the cruise even if you have 5 years worth of expenses in cash/cds. In theory you could and if you did it it would have been fine but it’s far easier in theory than in practice.

  4. My parents were very concerned about not outliving their retirement money. This is mainly because my dad’s mom was not prepared financially when her husband died when they were both in their mid-40s. A good deal of her support later in life fell on my parents, as my dad was an only child. This experience put saving for when you are old on my radar early in life. Although I am covered by a pension plan, I contributed to retirement accounts outside of the pension plan beginning with my first job out of college.

    The women on my mom’s side of the family tend to have much longer lives than the men (grandmother born in 1890 lived to be 78; mother born in 1922 lived to be 93). Given that, I am doing my retirement planning based on living to 100. I don’t know that I will make it that far, but even in today’s world aging without resources is pretty dismal. If I don’t spend everything, I won’t mind!

    The law changes frequently on how much you can set aside and the vehicles you are eligible to use to do that. I am lucky in that I do have a pension, but its amount will never increase (no COLA), so I have to have outside investments (some tax deferred and some not), delay social security as long as possible, and work for pay at least part-time until age 65. Of course, an unforseen issue can always blow the best laid plans out of the water!

  5. Rhett – I think about annuities for some of my clients, namely the less sophisticated ones who have maybe $1.5M in retirement and $1.5M in real estate at age 60 or so. Who knows whether they will be motivated enough to not blow through all their $$ by age 85?

    I also suffer from a lack of referral sources for “regular people”. I know plenty of people for money management, life insurance, etc. for the $10M plus crowd but not so many for the <$5M crowd. Particularly financial planners who don't push product – there are very few of those (*caveat that I don't like the ones who are douchey either). ;)

  6. So, I say, structure your assets into e.g. 300 laddered CDs @ $3300. One comes due every month for the next 25 years. Make’em quarterly if you want, 100 quarters @ $10k each. But you get to keep the money. You can also use T-Bills/Bonds, municipals, corporate bonds to the same
    effect. Tell your client rep at 1st Republic or JPMC Private Bank how you want it structured and they’ll do all the work.

    And separately have some pot of money in dividend paying equities to capture the long-term upside.

  7. As far as vehicles are concerned, my obersevation is as people age their ability and desire to handle and manage a wide range of financial assets decreases. Sometimes having money that is annuitized is an easier approach and gives you some comfort in the income you will be receiving.

  8. L – I have been very happy since putting all of my mom & step-dad’s assets into First Republic. She has a “wealth advisor” who does not push product. There’s an office in Wellesley and some in Boston.

    At the outset we all met, agreed on a strategy/structure/asset allocation and it’s been going great. But the key might be that I’m really the one calling the shots with him. He and I do talk often enough, as in when one of the quarterly CDs comes due, what’s the next step, but nothing pushy.

  9. But you get to keep the money.

    At the expense of requiring that “pot of money” remaining locked up. With the annuity you can spend that pot of money on a cruise around the world, kick in some for the grandkids college, etc. when you’re young and mobile rather than have it locked up as insurance against your living past 90.

  10. Currently dealing with some elder care issues with my mom and I have to agree with AustinMom at 10:34. My 80 year old mother is just not up to the task of managing her very simple portfolio – laddered CDs in her IRA, pension, social security, and one other tax deferred account. I can see the appeal of the annuity for older people who just don’t want to deal with that stuff anymore. However, like Fred, I don’t like the idea of forking over a bunch of money and then dying and not being able to leave that to the kids or whatever. We’ve sort of got an annuity in our rental properties that our tenants have largely paid for, the mortgages will be paid off when we’re in our 60s and then we’ll get a bump in our income stream that will keep going long after we stop working. The difference of course is that we can always sell the properties or leave them to the kids.

  11. Rhett – everything I am talking about is liquid. Even the CDs, which would be brokered CDs so you can sell them anytime.

    Also, this is not all-or-nothing. Perfectly fine, even desirable IMO, to have a separate “travel fund” that’s just in a savings account that you can access anytime for the once-in-a-lifetime opportunities as they come up.

  12. Rhett – everything I am talking about is liquid.

    If I understand your plan, rather than put $1 million in an annuity that would pay you $3300 a month even if you live to 105, you’d put $1 million in a series of laddered CDs and keep a pot of money in dividend paying stocks to live off of if you live past 90. Is that the plan?

  13. “My 80 year old mother is just not up to the task of managing her very simple portfolio – laddered CDs in her IRA, pension, social security, and one other tax deferred account. I can see the appeal of the annuity for older people who just don’t want to deal with that stuff anymore.”

    Yes, but doesn’t that require having the ability at age 60 or so to predict that your 80-year old self will not be able to manage the finances?
    By the time you realize that you just don’t want to deal with that stuff anymore, it is probably too late for an annuity. Isn’t it?

  14. Yes, exactly.

    Then the “pot of money” is money I can’t spend until I’m 90. With an annuity I can spend that pot of money on a cruise around the world when I’m young enough to go without worry. Under your plan that money needs to say locked up as a form of longevity insurance.

  15. And since the CDs thru 2032 (~0.40% for a one-month up to 3.1% for those maturing in 2032 now) / bonds beyond that all earn interest, that’s the “2% annual increase” option on the Fidelity annuities.

    But notice you get to keep 3% in the outer years, but Fidelity would only increase the annuity payout 2%.

  16. By the time you realize that you just don’t want to deal with that stuff anymore, it is probably too late for an annuity.

    No, the longer you wait the higher the monthly payout is going to be for a given amount. Although in this case we’re talking about immediate annuities not differed annuities.

  17. “Then the “pot of money” is money I can’t spend until I’m 90. ”

    Nah, not at all. This is not all-or-nothing. Whether travel means Paris for Fashion week, Branson for a few shows, or Atlantic City on the quarter slots bus, put some money aside for that fun, for Red Sox, Bruins, Sixers, Patriots tickets, etc.

    Only locking up (and that’s a relative term, since something is coming due and being paid into your checking account every month or quarter) a portion of the assets.

  18. Why not just dump half your portfolio into munis and collect the tax-free dividends? What am I missing?

  19. By the time you realize that you just don’t want to deal with that stuff anymore

    I’ve heard that as you get older and your faculties begin to decline you don’t know that’s happening as your brain tries to create a narrative to explain the lapses. So, if you forget where you put your check book or glasses you think someone stole them vs. saying “Oh, I have Alzheimer and I must have forgot.” Or do you actually know you’re memory is starting to go enough that you can rearrange your finances in time?

  20. I should look up that guy at First Republic again. I met one of them when they were getting started in Boston. Nice guy (note, all the sales guys for the banks in Boston tend to be ex-hockey guys, no idea why).

  21. put some money aside for that fun,

    Put aside what money?

    Options 1: $2 million in laddered CDs and $250k in dividend paying stocks as longevity insurance and $250k in travel/fun money.

    Option 2: $2 million in an annuity and $500k in travel/fun money.

  22. What am I missing?

    All the extra money you’ll have to spend when you’re young enough to enjoy it. See my 11:07 comment.

  23. Yes, but doesn’t that require having the ability at age 60 or so to predict that your 80-year old self will not be able to manage the finances?
    By the time you realize that you just don’t want to deal with that stuff anymore, it is probably too late for an annuity. Isn’t it?

    We put all our assets (except real estate) under the TIAA umbrella. For now, while I still have a few brights left, I’m managing it. But when I get older the TIAA people will happily manage it for me for a fee, and that’s my current plan. Let the TIAA people manage it, and make sure my stepson and DIL keep an eye on the TIAA statements.

  24. Scarlett – After having dealt with my parents, who lived into their mid-80s and mid-90s, about their mid-late 70s the desire/ability began to shift. Even my dad, who always was tinkering with scenarios for their portfolio (though he rarely changed much), had declining interest. Also, listening to other people and/or their children in their community talk, I think this reduced desire/ability is the more common path. It was at this time that children were taking over more and more management of their parents’ finances. If you have a child like Fred, who is responsible, ethical, and willing, transferring that authority over may be OK. But, if your children or other younger relative cannot be counted on, then you may become prey to someone who does not have your best financial interest at heart. What this has led me to, is to be prepared to make your portfolio simplier and/or get a Fred-like family member in place before you really need them.

    My dad made a few choices in their portfolio that are a bit unusual for his style of investing. I am not sure if he just took a financial adviors advice or if he made those choices on his own. Either way, now that they are my assets, it is time for some restructuring.

  25. I’ve heard that as you get older and your faculties begin to decline you don’t know that’s happening as your brain tries to create a narrative to explain the lapses.

    Sometimes, but not always. My mom was perfectly clear that she couldn’t handle things and needed to turn it over to me. My in-laws are currently sound of mind, but they are actively working with DH and his competent sister to shift responsibility to them when their minds start to go.

  26. I like the idea of the longevity annuity, e.g., at 65 +/-, plop cash into a deferred annuity that begins to pay out at age 85 (amount TBD, but designed to ensure that 1 SS payment + annuity covers basic income needs). Psychologically, for me at least, running out of money is the biggest fear, so I think knowing that something will be there will allow me to enjoy my earlier retirement more easily. Then again, DH and I were trying to price things out to get a sense of how much that would cost, and the very preliminary information suggested that the cost of the annuity would be right about the same amount as we’d need to support that income in perpetuity under the 4% rule if we just set that $ aside at 65 (and of course under the 4% rule, there is $ left to go to the heirs). But it’s definitely something we will look more closely at as we get closer.

    One way of looking things that I picked up from the MMM crew is the idea of “buckets” for retirement — not in terms of asset classes (e.g., laddered CDs/bonds for years 1-7), but in terms of how much you need to cover your costs for a specific period of time. DH and I were struggling to do a fair accounting, because we anticipate lots of changes in both expenses and income over time — e.g., very high expenses from 60-70 (lots of travel) when we have no SS/pension, then pensions and SS kicking in as travel probably decreases; then increasing medical; etc. So we did it like this, with age 60 as target retirement date:

    60-70: Expenses = X (base needs) + Y (travel) x 10 years = 10(X+Y); income = savings only. So in 10 years, I need 10(X+Y) to pay for the first 10 years. Work spreadsheet magic to evaluate anticipated investment growth between ages 60-70 to get target investments needed as of age 60.

    70-85: Expenses = X + 1/2 Y (figure some travel); income = savings + 2SS + pension. Ergo, actual amount of income needed from savings per year = (X + 1/2 Y) – (2SS + pension). Call that A. So now I know I need A x 15 years. More spreadsheet math — what do I need at age 60 to have enough at 70 to generate A over the following 15 years?

    85 – 100: Expenses X + Z (healthcare/long term care); income = savings + 1 SS (assume both of us won’t make it to that point) + survivor’s pension. So the income I will need from my investments is (X + Z) – (1 SS + survivor’s pension) — call that B. Again, back-calculate to target number at 60 to generate 15B, starting 25 years from retirement. [This was also where we threw in the annuity option, i.e., how much would we need to spend at say 65 or 70 to generate B starting at 85?]

    You can also further back-calculate all of these numbers to what you would need today to generate those figures to see how close you are. For us, this method led to a much lower number at 60 — our prior math was basically “what do we need saved to generate X+Y starting at 60 using the 4% rule,” which was a very high figure (highest-expense retirement period + assume zero from SS or pensions). This approach not only allowed us to change the assumptions over time, it assumes you spend down each bucket by the end of each period, whereas the 4% rule generally means the money lasts forever. It made me feel more confident about where we are — at this point, we have the last two buckets fully covered (no old-lady cat food, huzzah), and now we are filling up what’s left of the first one.

  27. You’re looking at it too narrowly.

    If you really want additional, formal “annuity” income in addition to social security, use PART of your assets to buy an annuity, put PART in e.g. laddered CDs, and put PART in the play money bucket.

  28. LFB: Your approach makes sense. We don’t budget or actively manage our money, so I don’t now how much money we will spend. My strategy is to see how much we have when we’re ready to retire and divide by our life expectancy and voila–budget.

  29. @Houston — hah! :-) Yeah, this came up for us because DH is one of those people who just seems to assume that there will always be enough money. So he wants to retire in 7.5 years when DS goes off to college, and he’s assuming that college will be paid for, and that we will retire in style to gallivant around Europe. And I kept telling him that, no, we are not saving nearly enough now to fund that kind of lifestyle in that period of time. So he finally did a spreadsheet to estimate a retirement budget, and it was fundamentally ridiculous — some was realistic (he took various living expenses from Quicken), but the travel included like $60K in airline tickets alone (quarterly first-class international flights) — he literally had us living better than we are now! And that led to the “ok, do you want to spend a lot less or work a lot longer?” conversation. Which then led to the fine-tuning, and the buckets, and the realization that we probably can do something *reasonable* at least within a year or so of when DS goes to college.

    Tl;dr: It’s a process.

  30. An issue came up with my grandmother that I never thought about when planning for retirement. Her children didn’t understand the account structure that she put in place since they weren’t as financially savvy as my grandmother. My grandfather died at 80, but my grandmother lived for another 20 years because she was almost 99 when she died. They didn’t have much, but they were savers in traditional bank products. My grandmother managed all of their CDs and investments so it was easy for her to keep doing that after he died. The problem is that my mother and my aunt never knew what she was doing with her savings since she was capable of handling it, and it wasn’t a lot of money. She used to manage the ladders/maturities until she wasn’t capable of taking care of it, but she never had a chance to really explain anything to her kids. They had to figure it out with my help because they didn’t know why she had so many accounts and CDs. I know that my FIL is similar because I had to take care of some stuff when he got sick. EVERYTHING involved paper, and there wasn’t even an ATM card. It was the same with my grandmother, so we had to wait for months until we finally received every piece of paper from every financial institution. These are children of the depression so they spread their money around, and I found less than $500 in several banks. My FIL still jokes about it, and he has refused to consolidate his accounts even though we told him that he doesn’t need all of these accounts. He definitely opened some of these to get the free toasters.

    Try to leave a list of all of your accounts and login information for your attorney/heirs. If you are still helping your parents, try to get them to do the same because legal documents such as a will are not enough if you don’t know where the money is located.

    My grandmother did run out of money about 8 years before she died. My family split all of the expenses that weren’t covered by the government. The lack of assets was a source of tension for her children because they eventually retired, and were aware that they didn’t want to run out of money for themselves.

  31. The seniors, both my parents and in laws will not touch the principal. They live within the interest/pension. Longevity is definitely on their minds as at least one parent lived to their 90s. Those parents were doing OK but in one case, health care costs at the end of life were significant (she had a downturn, recovered nicely, kids thought her 100th Birthday was possible, but was not to be).

  32. Lauren – YES x 1000. I cannot believe how many people have SO MANY ACCOUNTS. I had a client come in last year with 50 (and probably 40 different institutions!)!

  33. If you really want additional, formal “annuity” income

    You seem to approach this as if your plan doesn’t have a big downside. All the plans have big up and downsides and you need to weigh them and come to terms with that feels more comfortable to you.

  34. SO MANY ACCOUNTS.

    My folks probably could do with fewer accounts:
    Investments: His, hers, theirs, his own IRA, his and hers inherited IRAs
    Banking: Joint Checking, her checking, joint/his/hers savings, multiple CDs

    But everything is at one place, so I know where to look. One financial institution, one house.

  35. Nice post, Rhett.

    One of the challenges of retirement planning for me is I have no idea what it will look like. Will we still live where we are now? Move to a city and have everything within walking distance? Have a small place near the kids? Where will the kids be? I’m not even sure what I want it to look like, except I know I want to be an active and hands on grandmother.

  36. ” All the plans have big up and downsides and you need to weigh them and come to terms with that feels more comfortable to you.”

    +1

    Personally, I believe annuities have a place in the investment spectrum and will be appropriate for many people. I’m just not one of them. I do not have an axe to grind with the Fidelitys or insuance companies of the world that offer the products. There are lots of people, including regulars here, for whom the guaranteed (word used gently*) monthly deposit into their checking account without them having to make any decisions after the initial one to buy in is the best, i.e. makes them sleep best at night.

    *In the relatively early days of 401ks I worked for a company that had 3 options:
    – company stock (no thanks, paycheck already tied to company performance)
    – general fund (roughly 70% stock / 30% bond) <== where I put my money
    – guaranteed fund (income securities only)
    well, wouldn't you know it but some of the securities in the guaranteed fund defaulted so holders of that fund actually lost money and they ended up closing that fund and revamping the whole program shortly after.

  37. Yeah, there’s seriously no guarantee that the insurance companies will be around to pay out on the annuities.

  38. “One of the challenges of retirement planning for me is I have no idea what it will look like. Will we still live where we are now? Move to a city and have everything within walking distance? Have a small place near the kids? Where will the kids be? I’m not even sure what I want it to look like, except I know I want to be an active and hands on grandmother.”

    Yes! I, too, have no idea. I also have no idea when we will retire or how much money we will have. I imagine that we will have 2 places–a small house/condo/apartment near our family, and a piece of land in the country for DH to amuse himself with.

  39. Right now I’d like DH to retire from the legal field in ten years and do something more low key. We would still have two kids just about to start high school and one in college so we’ll see. I’d really like to move back home to be closer to family, so part of this would involve selling our house down here and using the equity to pay for a house up there. I have a state pension that is supposed to pay out at $1,000 per month and we’d just let our other retirement funds ride until then and live off of our taxable account for ten or fifteen years. We’ve also considered buying a rental house on Cape Cod if the numbers worked .

    I just looked at my dad’s retirement funds (he’s 69) and planning on retiring in January. He has an advisor which is a good thing because he just does not understand the stock market. An annuity would be perfect for him because he thinks he really only needs $1,000 per month from his investments coupled with SS and maybe working part time. He thinks if the stock market returns $20K on his investments he’d just take that out. I’ve tried to explain that he should only take 3 or 4% out per year (and really his IRA is not substantial so the number will not change materially from year to year) but he just doesn’t get it. I’m worried he’s going to park it all in cash once he’s retired.

  40. My mom is nearing 80 and has always held stocks, mostly telecom she inherited when her father passed away. The dividend increases and my father’s mechanics pension and frugal habits mean she has not had to touch the principal.

  41. We don’t have nearly the same amount money most of you guys do. But our retirement plan definitely includes a move to warmer and cheaper place with a small condo near our kid. As for travel, we hope to keep it ongoing so we wont wait for retirement to do it. Who knows at that age what one is capable of.

  42. Rhett – but there are limits. MA, MT are $250k; NY is $1M

    Just like with your CDs.

  43. Yeah, but when you are buying brokered cds through your financial advisor you can structure things so that your exposure to any individual bank is within the limit all while having the whole portfolio inside your single brokerage account.

  44. but when you are buying brokered cds through your financial advisor you can structure things so that your exposure to any individual bank is within the limit

    I just checked Ameritrade and: The Annuity products available through TD Ameritrade are provided by established insurance carriers, with S&P AA- ratings or better. Fixed and variable annuities are offered through a dedicated, non-commissioned team of licensed specialists who can help you find the right solutions to meet your needs.

    I assume they can structure them to stay under the state limits as well.

  45. DH has a traditional government pension, so that fills the “annuity”/guaranteed monthly deposit part of our retirement plan. I don’t see that we would want to purchase an additional annuity if things don’t change much from today.

    I have some idea what our idea retirement plan looks like – snowbirds with a city high rise condo as well. Active retirement with some travel (nowhere near as extensive as some of you), sports season tickets, keep a relatively high food budget, etc.

    Right now – we are just in the “save as much as possible” stage of the plan, but barring an expensive derailment, I think we will be fine for our goals. I haven’t thought as much about the mechanics at this, so it is really interesting to read this thread.

  46. Anyone planning to live overseas in retirement? It’s something we’ve talked about doing early in our retirement. But it looks like it’s difficult to live anywhere longer than the typical 3-mo tourist visa unless you are working or going to school. Anyone have any insight on this?

  47. Anyone have any insight on this?

    My understanding is you can live almost anywhere for as long as you want provided you prove you have resources. What country wouldn’t love you living there and spending money?

    In France you need:

    Proof of means of income
    Proof of medical insurance
    Proof of accommodation in France

    https://internationalliving.com/countries/france/retire/

  48. “I contributed to retirement accounts outside of the pension plan beginning with my first job out of college.”

    As did I.

    I got DS started earlier; earning from his PT job are going into his Roth IRA.

  49. “Sorry, not Sixers, but Celtics.”

    Why not the Sixers? They won’t suck forever.

    Trust the process.

  50. “Why not just dump half your portfolio into munis and collect the tax-free dividends? What am I missing?”

    You need to make sure to take inflation into account. If you just keep spending all the dividends, you principal will go down with inflation (at least if inflation is positive).

  51. The topic of that article doesn’t show up in the URL. It’s about MM.LaFleur.

  52. Rhett, it’s not just about “what country wouldn’t want you living there” The EU parliament recently voted on rescinding visa-free travel for people from the US as a response to changes made by the US related to immigration.

  53. Our plan is similar to what the OP article describes. DW and I both plan to wait until 70 to draw SS, as the guaranteed (as much as anything), inflation-adjusted annuity will ensure neither of us is ever flat broke.

    Our current jobs both have contribution-based retirement plans that are typically paid out as annuities, although the lump-sum option is available. We’ll probably annuitize both of out plans.

    I also have a contribution-based plan that can be taken as an annuity or lump sum, and I’m planning to annuitize.

    So between SS and the annuitized plans, we should have enough income to comfortably cover all our living expense besides medical and long term care.

    Our retirement plans start paying out as soon as we retire; I don’t think we have an option to defer the annuity. We’ll need to tap savings until we hit 70, but we’re on track to be comfortable with that and spending at about the same rate (not including college) as we are now, plus some extra for travel.

    We also will have some money set aside for medical bills. Based on estimates I’ve read (mid 200s), we’re planning to set aside about $300k.

  54. finn – back to kindergarten: which does not match Patriots, Bruins, RedSox, Sixers?

    which reminds me…when we lived in LA a friend and I got season tickets one year to the Clippers during their 40(?) year horrible streak. About 10 rows up sorta mid court. $10/game. Lakers at the time were something like $40/game. We didn’t care about the clippers winning, just liked going to the games.

  55. The EU parliament recently voted on rescinding visa-free travel for people from the US as a response to changes made by the US related to immigration.

    That just means extra paperwork, it doesn’t change you ability to live there if you prove you have money.

  56. “The EU parliament recently voted on rescinding visa-free travel for people from the US as a response to changes made by the US related to immigration.”

    I find it hard to believe that the EU would put at risk so many tourism dollars.

  57. The vote was advisory only. I think they are waiting to see where we go with the new vetting regulations

  58. I would like to live elsewhere (non-US) in retirement, but DW is of a different mindset. Mostly, it’s the language barrier thing. I’ve never met a language I couldn’t learn enough to get by pretty quickly; she is more stereotypically American when it comes to that sort of stuff. Yeah, I know, if we really lived someplace like Costa Rica we’d find the expat community and there’d be plenty of people for her to pal with. I just don’t think she’s up for that.

  59. I wonder how the international health insurance prices out. Also something to budget for – medical evacuation insurance, if you have a stroke while on that Viking River Cruise.

  60. Houston, if our savings got to the point where the we could put them in muni bonds and the interest would pay enough for us to live comfortably plus about 5% or more to account for inflation, I’d be tempted to go that route.

    Yes, I’d be leaving potential stock market gains on the table, but in that situation, why risk a sure thing?

  61. “we could put them in muni bonds ” — Just make sure they’re general obligation and not revenue bonds. Still, even GO bonds are not a “sure thing” since a few of those have defaulted.

  62. Although I never thought I would purchase an annuity (I used to be in the business, mostly variable annuities), now that I’m at retirement age I can see buying one to supplement my SS and small pension payments. If the total of this guaranteed income provides a comfortable lifestyle and then I can use my nest egg for luxuries, I can see the benefit especially as I ease into late retirement years. But I’d have to give it more thought. The loss of control does bug me a bit.

  63. “The loss of control does bug me a bit.”

    The corollary is freedom from having to manage.

  64. “The corollary is freedom from having to manage.”

    Finn, you may recall that I learned on this blog, probably within the past year or two, that there are people who take pleasure in checking up on their investments and chatting about them. Sounds like incessant worry to me, and apparently to you as well, but not everyone enjoys the same thing. For those, control over management would be a feature,; feeedom from it would be a bug.

  65. Fred, how about New Zealand? You could pal around with those ultra-wealthy preppers when they’re visiting their bunkers, and NZ probably has health insurance good enough to alleviate the concern that Rhett raised. Would that be inexpensive enough and feel exotic enough for you?

    Houston, I’m still living in Tampa, am aware of the loss of tourism revenue that comes from changes to immigration policy and procedures.

    “The corollary is freedom from having to manage.”

    Finn, you may recall that I learned on this blog, probably within the past year or two, that there are people who take pleasure in checking up on their investments and chatting about them. Sounds like incessant worry to me, and apparently to you as well, but not everyone enjoys the same thing. For those, control over management would be a feature,; feeedom from it would be a bug.

  66. “Sounds like incessant worry to me”

    Not everyone lived on an allowance from Daddy.

  67. Off-topic update on the situation with DS and his F in robotics, for those who are interested:

    We met with the teacher this afternoon. He agreed with DS’ assessment that he is very hands-off in class. He said his philosophy has always been if the kids need help, they’ll ask for it, and with DS’ class, hardly anyone ever asks, so he assumes they know what they are doing. The way the class works is they get a “build” assignment to build a robot to complete specific tasks, and they have five weeks to complete it. The success or failure of the build is the bulk of the grade, and they also have a lab notebook they need to do and another assignment that goes with it as well. At the end of the last build, he originally gave zeroes to everyone who was unsuccessful. The result was 10 out of 14 kids in the class had overall Fs. He said he regraded the builds and gave points for building the robots even though they didn’t do what they were supposed. So now DS has a 64 overall, for a solid D.

    The teacher agreed that he needs to be more involved in the class and he will be more proactive in going around in class and asking if people need help. There is a second teacher involved in the class and he will have her do it as well. DS agreed that he will be more proactive in asking for help (he has never been very good at doing this), and he will go to office hours and at lunch if he is falling behind on the next build.

    It was a very positive meeting. I still think the teacher should be doing more active teaching and not just “helping”, and he should have addressed the issues earlier in the year. But hopefully things will improve for the rest of the year.

  68. “He said his philosophy has always been if the kids need help, they’ll ask for it, and with DS’ class, hardly anyone ever asks, so he assumes they know what they are doing.”

    I wonder if he communicated this to the students at the beginning of class.

  69. Anons, are you both incapable of understanding the difference between keeping an eye on your investments so you can take necessary action and watching them and the markets and the Fed and other players so you could chatter about them as if it was your favorite spectator sport? Not the same thing.

  70. @Anons – . If you can’t do better than gratuitously mean MS-level anonymous sniping, at least come up with something new/different/clever.

  71. The discussion so far has been very reasonable. Money divided into buckets, a bit of annuity if you don’t have some sort of traditional pension – even a non inflation adjusted one, laddered CDs, munis and dividend payers in the after tax accounts. I’d add rental real estate if you have experience with that. My touchstone for retirement planning is cash flow. As you approach retirement age, or contemplate early retirement, project your real spending needs. That can include college and grad school tuitions for those who didn’t start families at a young age. Pay off the primary residence and do all the fancy improvements while you are working. If you want a tax deduction or leverage, do it with a second home.

    My main advice to you all is that you really don’t need a huge retirement number. I am sure my totebag sistah from another mothah really believes she needs 8 figures. I am going to open the kimono and say we have a modest paid for townhouse (still priced at a ridiculous amount in our zip code), pretax pension income (85% of which dies with DH) equivalent to an immediate annuity you could purchase for 1.5M, his SS today and mine later, 2M 40% pretax/60% aftertax. And we live in complete comfort in a high COLA, buy top shelf liquor (winking at the millionaire next door guy), travel at will in the front of the plane if we choose, have money to help out our kids. I have no fear of outliving my money, just of not leaving much of an inheritance. There is so much discretionary spending in our budget now that it is trivial to cut things out or trade down. I don’t have the net worth to cover the cost of grandkids’ college, which is a mild regret. Or the net worth to move to the Upper West Side, which is a pipe dream.

  72. YKW mentioned college a couple of times, and that can really mess with retirement plans, especially for totebaggers who’ve had kids later in life than many non-totebaggers, and thus will have kids in college when they (the parents, not the kids) are near retirement age.

    The number can be pretty staggering. 4 years of undergrad education and 3 years of grad school for a current senior, full pay, would be approaching $600k.

    And of course that will be higher for younger kids.

  73. Finn, or it could be orders if magnitude lower. If a person is funding retirement and college at the same time, the student could split time between community college and the closest four-year public institution, while living at home. That cuts the undergrad cost down to around $30K – less in some states. Since generally a student is considered independent for financial aid purposes once they have a bachelors, they are likely eligible for more financial aid in grad school. Obtaining an assistantship would knock the cost down to living expenses. There is no way I would find an expensive private education, other than possibly an ivy, if I was also trying to retire st the same time. A motivated student can make good use of even the cheap degree, especially if there is no student loan debt. $600k towards education in retirement is nuts!

  74. The point I take from discussing the college cost add on is that retirement savings are one thing, perhaps reasonably attainable, , but many people lump in a lot of other future financial needs and wants into the amount they are trying to realize on retirement day.

  75. “There is no way I would find an expensive private education, other than possibly an ivy, if I was also trying to retire st the same time.”

    How about someplace like LSJU or MIT? A lot of people would rank them above some, perhaps most, of the Ivies.

    But yeah, I am talking about HSS; if it weren’t a HSS, then we’d be looking at some of the schools that offer generous merit aid. And we’ve had the discussion here in which it’s been expressed that certain schools are worth that much.

    I suppose from the retirement planning perspective the kid who benefits from such largesse might need to contribute to parents’ retirement, or at the very least not expect any inheritance.

    Tangent– DS asked me last night what I would consider the Harvard of the South, because there was a story line in some show he’s seen recently in which a character claims to have gone to said school.

    What schools would you guess?

  76. Finn – Totebaggy families here would fund Cornell, Harvard of the South. Their kids would probably get significant tuition discounts at places like Wake Forest. They would most happy if the kids chose the state flagship or OOS flagships like UVA. These are all names drawn from recent conversations.
    Very few would fund grad school. The profile of Totebaggy families here, usually one high income earner with stay at home spouse, three kids, leaves people with fewer resources (money, time, energy). After supervising their kids K-12 and supporting them through college, they are ready to untie the cord.

  77. Denver, that is a pretty typical setup for K12 robotics classes. The weird thing here is the hardline grading. Usually these classes are “fun” classes with pretty easy grading standards. But they are not usually “taught” in the normal sense.

  78. I don’t know a lot of people that plan to save to fund grad school for their kids. The friend with the kid that is going to school near Fred received a large amount of merit aid, so now there is money left in her 529 if she wants to attend grad school after college. They didn’t plan for this, but they will have money left now to help with additional education expenses. Most of my friends are just planning to save for college, and most won’t be able to save enough for all of their kids to attend without some debt unless they receive merit aid or go to state schools.

    I’ve heard Rice, Duke and Vanderbilt referred to as Harvard of the South. It seems like many of the southern schools are becoming more popular. It is just based on anecdotal conversations with my friends, but it sounds like some kids would prefer to be in a warmer location for college. Schools such as Emory have been able to become much more selective about the students they admit for their undergrad programs.

  79. On the college front, DS’s school is sponsoring some college visit trips. The upcoming one is to Philadelphia, to see Villanova and Drexel. I have actually collaborated with CS faculty at both schools, so I have a sense of their programs. I don’t think DS would be happy with Villanova but would love Drexel. Unfortunately, I don;t know if he could get any merit help there. I told him he should still see the place.

  80. I have always lumped Duke in with schools like Brown and even Yale. I consider them a cut above Vanderbilt, and especially Rice. They are all strong schools though.

  81. The robotics and computer science classes are taught in the same manner in my district. I happened to attend a Board of Ed meeting that was attended by many HS parents that came to get their complaints on the record about the teacher. It sounds similar, supplies or ipads/laptops are distributed to the kids, and they have to come up with a project. The teacher walks around during the class, but he doesn’t teach at the beginning of each class. It isn’t like a lab that the kids might be used to from their science classes. The kids that seem to be successful in these classes are the kids that probably could have taught the class themselves because they already know so much about the subject from clubs or outside interests.

  82. On Crazy Ex-Girlfriend, they refer to Emory as the H of the S.

  83. I thought that Duke held the H of the S title. The state flagship goers would say “too big for their britches”. :-).

  84. An unrelated rant. Turbo tax this year seems to default to a blank return every time i log in, instead of to the last used return. I have not figured out how to change this. Also, the method for entering MA tax credits is not intuitive. But with multiple family returns rolling over year to year, I don’t want to go to another provider.

  85. Harvard of the South is a bit of a joke to me, because you can find any number of schools proudly claiming that mantle – including some that clearly should not.

  86. The kids that seem to be successful in these classes are the kids that probably could have taught the class themselves because they already know so much about the subject from clubs or outside interests.

    That’s the sense I get. The teacher said he posted some programming tutorials online, but they only cover the basics, they don’t cover the more advanced stuff they need to know after the first couple of builds. I expected that he would have taught more of the programming and not expected the kids to have to figure it out on their own.

  87. Turbo tax this year seems to default to a blank return every time i log in, instead of to the last used return.

    Don’t get me started on those f-ing whores. It’s so riddled with bugs this year it’s insane. For all the talk of hardcore CS one of the biggest bugs they have likely results from having a =.

  88. I expected that he would have taught more of the programming and not expected the kids to have to figure it out on their own.

    Was that clear at the start? I can certainly see how they feel that’s the most realistic option for kids to learn – figure it out on your own. But, if they never made that clear that’s a problem.

  89. “ I expected that he would have taught more of the programming and not expected the kids to have to figure it out on their own.”

    Well, this classroom practice is consistent with the predominant style of instruction taught in schools of education, where it goes by names like constructivism, discovery learning, inquiry, student centered, etc. This is in contrast to direct instruction, where teachers actually explain stuff as opposed to having students figure it out on their own. The argument that figuring it out on your own leads to deeper understanding is laudable, but in practice many teachers do not apply this technique in an expert manner and different student populations suffer from its application. It’s really a case of the rich get richer and the poor get poorer.

  90. “I don’t know a lot of people that plan to save to fund grad school for their kids.”

    Agree. Our plan was always to try to get college covered, on the theory that (a) a true grad school that really wants you will provide aid/stipends/teaching assistant jobs, (b) a professional school option offers sufficient income on the back end to pay off loans, and (c) hey, at least they won’t have loans from both college *and* grad school. That thinking is changing a little, simply because my stepdad’s untimely death left a trust specifically for the grandkids’ education, and the inlaws are making noises about something similar, so there may be more $ available than when we made our initial plan. But even that is a limited pot, shared with less-well-off cousins (= moral compunction to take less than equal share), so it will likely just take the edge off.

    As you-know-who said, our retirement plans do assume parental responsibility for college. But I am *not* delaying my retirement date to fund med school — at least, not without a firm commitment that said doctor-child will buy me a lovely beachfront home out of sheer gratitude. :-)

  91. Well, this classroom practice is consistent with the predominant style of instruction taught in schools of education

    That’s also how things work in the job world – at least in my experience. I find an odd disconnect where folks complain about how millennial employees have to have their hands held and have everything explained and praise forthcoming at ever turn but they insist schools do just that.

  92. LfB – I was having a conversation with DS yesterday. When I told him the cost of an independent private school K-12, he said ” Mom, that’s the cost of a new car every year”. He also said “you have to think of your retirement, as well” (where that came from, I don’t know).

  93. save to fund grad school… likely eligible for more financial aid in grad school

    I thought you don’t really get financial aid for Med, Law or MBA grad school programs. They expect you to pay it back with your increased earnings. For STEM grad school not only should it be free, they should pay you a stipend. I could however be mistaken.

  94. A high school isn’t an office. The teacher is getting paid to teach and the students are there to learn from the teacher if they don’t know how to create an app, or build a robot.

    They should have to teach something that’s similar to a lab. Teach, and then say go to create. It’s not a paid period to surf the web while 14 to 17 year olds sit there looking for help.

  95. Lauren,

    That’s a perfectly valid position to take. However, don’t complain (not that you do) about millennials needing their hands held.

  96. “That’s also how things work in the job world”

    That same argument is used for group projects that are supposed to be a means for students to learn subject matter and not just how to manage their lazy/uninterested/incompetent fellow students. As was already stated, a school is not an office. And just maybe millennials would not need so much hand holding if they actually learned things in school instead of being constantly whipsawed by ineffective instructional methods.

  97. For law school, you can get merit aid for your LSAT score. DH scored very high on his LSAT. There were 4 law schools in town (two recently combined). He received 3 full scholarships to the lower ranked schools and $15K/year to the top ranked school. He knew he wanted to stay in town, so he didn’t look to apply elsewhere. He went back to school as a second career and not straight after undergrad. I recall he took his first practice test and scored somewhere around 140-150. He found out a friend of his who he thought wasn’t as smart scored a 165 on the test, so that motivated him to study more. DH didn’t take any classes but prepped by simulating taking the full 3-hour test timed. He did about 11 full tests before taking the real LSAT.

    I’m assuming schools will still give money for high LSAT scores as it helps with the class rankings. DH ended up attending the highest ranked school even though he needed some loans, because he figured he had a better chance of getting a job than if he were at the other schools. Top firms would interview a higher percentage of the class at the higher ranked schools compared to the other schools.

  98. At my kids school there are independent study electives. If a teacher is just guiding, I would expect this is the category it would fall under.
    The titles of the electives are very catchy but a good read through the class description is a must. Kids just look at the title and want to sign up.

  99. ” instead of being constantly whipsawed by ineffective instructional methods.” that encourages or requires parents to intervene thus creating a mindset of dependency and helplessness in students.

  100. And just maybe millennials would not need so much hand holding if they actually learned things in school instead of being constantly whipsawed by ineffective instructional methods.

    I have to say that’s one of the most interesting lessons I’ve learned on the Totebag. The idea that a student shouldn’t be expected to learn anything own their own, they should expect to be taught everything they need to know.

  101. that encourages or requires parents to intervene

    Are we sure Prof Google doesn’t have tip sheets, step by step instructions and youtube videos that would walk the kids through what they need to know?

  102. MM – the thing about Drexel is they have a co-op program, optional. If you’re in it it’ll take 5 yrs to graduate but the kid will spend 2 semesters in, probably paid, internships that help when they get out. No requirement to go that track so the 4yr option still exists. (niece goes there). Certainly a good name in the Philly area; don’t know how much it extends outside cheesesteak-land.

  103. There is lots of merit aid available for law school, but not always at the school you want to go to. Also, the sticker is so high that even with aid, people end up with tons of $$ in loans. If you go into public interest, there are loan-repayment assistance programs, but you have to stay in the public interest job for 10 years after graduation IIRC.

  104. Denver,
    Rhett’s comments reminded me that most schools buy these things in kits and googling the name of the kit may get your kid an instruction manual.

  105. Based on a prior survey, most Totebaggers make more than we do. However, so many people are commenting on how they cannot afford to pay fully for college and/or grad school for their kids. I don’t understand the disconnect.

  106. Rhett, I have complained about millennials. I don’t think I ever posted about the mom that came to my office to complain to me about her son’s appraisal. This was pre 2001, so she was able to easily get upstairs.

  107. We have no plans to pay for grad school, because I think there’s real value in having some skin in the game at that point in your life.

    I have never heard of a school consistently referred to as the Harvard of the South. But, from my years in NC I heard Davidson referred to as the Princeton of the South. My understanding is that’s based not so much on academic similarities but more cultural similarities – both have eating houses, there were some sports similarities (basketball style, I think), and others.

    Meme – my grandmother did not pay for college for me, but she did fund things my parents would not have that were college/academic related, like a summer study program abroad and a couple other things. Maybe your funds would allow something like that? It was very meaningful to me.

  108. they cannot afford to pay fully for college and/or grad school for their kids.

    It’s not about not being able to pay for grad school but not needing to. If you plan on law school and won’t land a job that will allow you to pay off your loans with ease, you have no business going. Same with MBA or Med school. Again, for STEM they should pay you.

    What grad school are you planning on paying for that won’t be either free or allow them to pay their loans with ease?

  109. Rhett, Back In The Day, I received Pell Grants when I went to grad school, because I went straight from undergrad and had no money, along with a grad assistantship and low interest loans. I just assumed things were the same today, but I truly have no idea

  110. I went straight from undergrad

    For an MBA? I’ve been told it’s almost impossible to get into a “good” MBA program without professional work experience these days.

  111. “If you plan on law school and won’t land a job that will allow you to pay off your loans with ease, you have no business going.”

    ITA and have given that advice to many young people, including DS.

    As others have noted, there is financial aid available for law school, but usually that means having to attend a lower-ranked school . The law school I attended dispenses generous financial aid, but those who are seeking need-based aid still have to provide information on parental finances, regardless of age or marital status. That was the situation 30 years ago when I attended, and people complained about it then, but with limited funds, it’s only fair to target students whose parents are unable rather than unwilling to help.

  112. I didn’t say it was the right decision! Just making the point that I got financial aid. It was not a top tier school – it was a state U. I was given the advice to get work experience first, but rejected it, because I was somewhat panicked about my discovery that I did not want to be an accountant. I loved being in school, and at the time was tentatively planning to get a PhD. I had strong GMAT scores and recommendations, so had a few decent options, but was very wary of debt. I definitely made a sub optimal decision, but my parents were really against me going straight through rather than working, so I also did not really receive any advice, and there was no Internet back then. I was pretty stubborn back in the day and did it the way I wanted to. The grown-up version of me would have made a different set of choices. I did meet my husband then, so there were definitely some pluses

  113. On scholarships for law school, a friend’s son just graduated from UT Law where he was on a full scholarship. He was also accepted to Harvard, but had a ton of debt from financing undergrad on his own, and planned to stay in Texas, so went for the free ride.

  114. DH decided not to go to grad school, although his brother did. His brother’s employer paid for a well known grad school. DH would have gotten his grad school paid for as well.
    DH felt that grad school wouldn’t make a difference to his career trajectory.

  115. MBT – smart!

    Houston – a quick back of the envelope calculation is that college for our kids would be somewhere in the neighborhood of $1M. So I am not sure we will have an extra $1M lying around in 9 years, and I am hesitant to say we will be able to afford it by then.

  116. My parents paid for grad school but it was part of a deal struck if we received full rides at the in-state school for undergrad. Good deal for me and my middle sister. Terrible for my oldest sister who doesn’t really enjoy speaking with anyone with an IQ less than 130. She went straight through undergrad with a 4.0 and will never consider living outside of New York City (where she went to law school). All three of us received full merit-based scholarships. Are merit funds that much harder to come by now?

  117. Robotics assignments should be detailed enough that a kid can figure out what they’re supposed to do. Teachers should go beyond being available for questions and actively seek out teachable moments. It isn’t a subject like accounting, where the correct answer is determined by social convention. The material itself gives feedback–either it works or it doesn’t.

    The only experience my son had going in was building Lego. After the kids built bots from step by step instructions, the instructor went over how it worked with each kid. Assignments had clear parameters, sometimes in terms of what tasks the bots should be able to do, sometimes in terms of a new piece of equipment to be included. My son downloaded Mindstorms software (free online) and played with it at home. It wasn’t a question of coming in with prior knowledge–he enjoyed stretching himself like that. Most of the activity was done in small groups, with the instructor circulating, answering questions asked and intervening when he could see that a group was ready for a particular idea. That model—teacher actively responding right where each kid is–was great. I can’t imagine a teacher giving step-by-step how to assemble something and write a program. That would be like a writing teacher telling them their essays, one sentence at a time. They’d see how it’s done, but not have experience in the most crucial part of doing it. I think this way is more taxing to a teacher if it’s done well, because they have to be tuned in to each kid, and can’t go through a routine on auto-pilot. This method required /had room for problem-solving and creativity. People will differ on whether that’s a feature or a bug. My impression is that those traits/skills are the most highly prized in later hiring for this kind of thing.

  118. “. If you plan on law school and won’t land a job that will allow you to pay off your loans with ease, you have no business going. Same with MBA or Med school”

    Cause who needs non-profits, huh? Poor people shouldn’t get injured or sick if they can’t afford to pay a doctor.

    Aren’t you glad people teaching at those institutions don’t have that attitude? They’d never be there if they did.

  119. “It’s not about not being able to pay for grad school but not needing to. If you plan on law school and won’t land a job that will allow you to pay off your loans with ease, you have no business going. Same with MBA or Med school. Again, for STEM they should pay you.”

    Yep, that. DH had his STEM Ph.D fully paid for, with stipend. Even my mom had her humanities Ph.D fully paid-for, with TA position for spending money (that is what supported both of us). I paid my own way, but in a professional school, with the full expectation that the salary would be worth it (although since I chose UT at @$3K/yr and landed a $5K/mo summer associate position first year, those loans ended up only being $2K).

    IDK, the universe has changed a lot, I could be wrong. But my family experience says that grad school sort of tends to cover itself one way or the other.

    @MBT: smart kid — hook ’em! He will do great in TX with that degree and is much better off not kicking off his career with six figures of debt. I know I’ve told the story before, but one of my friends at my first job figured out within the first year he really wanted to be an FBI agent. But he had $100K in loans from Harvard (because he just assumed that when Harvard says yes, you don’t say no). He ended up working in a job he really disliked for 5-6 years to pay off his loans before he could finally afford to quit and do what he really wanted to do.

  120. L – are you assuming Ivy or SLAS for all of the kids? We have too much saved if they stay in state and just about enough if the college savings keeps growing at a a similar rate for four years of private school. If it is important that they go to a private school for all four years, than yes – that is a daunting sum but realistically, you would not need all of it at the start of year 9. How many would you have in college at one time?

  121. “@MBT: smart kid — hook ’em! He will do great in TX with that degree and is much better off not kicking off his career with six figures of debt.”

    If my kids want to stay in Texas, I would definitely tell them that UT or A&M will go much farther for them career-wise than an Ivy. It is definitely seen as a con here.

  122. S&M – many top tier MBA programs have social entrepreneur and non-profit tracks that are well regarded. The pay discrepancy isn’t always that bad but spending a few years at a Booz Allen, McKinsey, etc., would pay off some debts and make you a better non-profit executive down the road. There are scholarship funds at my alma mater to help people looking at these tracks. The people that are more upside down are the marketing people who want to work for luxury goods companies – it costs their whole paycheck to keep up with the appearance standards at those firms and the pay is not commensurate with I-Banking.

  123. “Cause who needs non-profits, huh?”

    If you need your parents’ money to be a do-gooder, your parents are the charitable ones, not you. Save the world on your own dime.

  124. Cause who needs non-profits, huh?

    S&M- If you go into public interest, there are loan-repayment assistance programs, but you have to stay in the public interest job for 10 years after graduation IIRC.

    Qualifying employment for the PSLF Program is not about the specific job that you do for your employer. Rather, it is about who your employer is. Employment with the following types of organizations qualifies for PSLF:

    Government organizations at any level (federal, state, local, or tribal)
    Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
    Other types of not-for-profit organizations that provide certain types of qualifying public services

  125. Mia, that’s good news.

    Laura & Rhett, I agree that for traditional academics like Arts & Sciences, if they won’t pay for you, they don’t want you. I paid for my grad degrees with assistantships.

  126. As an example of regional/cultural difference, friends with probably low/mid 7 figure wealth didn’t pay for any of their kids to go anywhere but the state u a few blocks away, but they helped with med school when their daughter decided she wanted to be a pediatrician. She works part-time after kids and I don’t know if she would be free to make that choice if she had more loans. Medicine pays well, but costs for tuition and living expenses before you start practicing are significant. She’s happy and she likes her work/family balance.

  127. “Cause who needs non-profits, huh? Poor people shouldn’t get injured or sick if they can’t afford to pay a doctor.”

    That’s not what he was saying. These schools get away with charging massively high tuitions because they dangle the lure of the high-paying job that will wipe away those loans quickly. But the reality is that only a few kids get those jobs, and many many more end up with crippling loans that they can barely afford to pay. Now, if you can afford tuition and want to go into public service, that is awesome, more power to you. But most first-year law students did not decide to fork over $200K over three years because they hope to make $40K/yr working for the ACLU — they did it because they saw starting salaries 3-4x that amount. So before committing to law school, you need to take a hard look at your own resume and the school in question and figure out what you actually want to do, and if your goal is that big firm salary, whether you have a reasonable shot at one of the few golden rings available. Instead of doing what most people do and just assuming that J.D. = six-figure jobs for the taking.

    This is exactly the advice I would give my own kids, btw, assuming either of them were interested in law school.

  128. Just trying to make the point that not all value is measured monetarily, to a commenter who frequently posts as though it is.

  129. LfB,
    Well put. Even today, with websites like Above the Law and others that clearly report the dismal job prospects for average students at average law schools, kids still pour into them. It’s even worse with PhD programs in the humanities where there are very few tenure-track positions in any given year. I.just.don’t.understand why these students, some of them with nonworking spouses and multiple children during grad school, thought that getting a PhD in theology or philosophy or classics was a Good Idea.

  130. Anon, I think she means me. There are income based repayment and balance forgiveness options available to those who want to work 10 years in the non-profit sector.

  131. “make $40K/yr working for the ACLU”

    Tangentially, a good friend of mine (who works for her state bar association as a lawyer) is married to a guy who got an “economic diversity” scholarship to Harvard for his undergrad. Idk how he paid for law school, but when he was finished, the ACLU is exactly where he went. As one of their lead attorneys in the state, he’s in the news frequently. I’m sure there are others who are not reaching for one of those few rings when they go to law school.

  132. A priest friend, who has an MBA and works with university students discerning majors and job possibilities, is only partly joking when he tells them that “the market will determine what is God’s will for you.”

  133. We have gone over here, how med school should be carefully considered. I don’t think going many students realize the number of years it takes nor what the amount of loans means for life choices. If they are committed totally, then it’s a different game. Girls who are good at Science and Math from my ethnic community often choose the medical school path without I think factoring in the various pros and cons.

  134. I.just.don’t.understand why these students, some of them with nonworking spouses and multiple children during grad school, thought that getting a PhD in theology or philosophy or classics was a Good Idea.

    Just a thought – do they not have a good understanding of what life is like outside the academy?

  135. @SM — No one here is criticizing kids who want to do good in the world. We are saying they need to go into it with their eyes open, and criticizing the schools who mislead kids into thinking that the price of admission will pay for itself in future six-figure jobs.

  136. “Just a thought – do they not have a good understanding of what life is like outside the academy?”

    That’s a good question. Many of the students (or their spouses) whom I know do not come from academic families. (That is true in DH’s department as well — there is a surprising lack of second-generation academics there.) So even if they themselves have never worked in business or industry, presumably their parents and older siblings have.

    But even if they were raised in an academic bubble, surely they’ve noticed early on in their 6+ year academic program that the graduating students are not finding tenure-track positions and are instead taking one post-doc after another. That is the part that mystifies me.

  137. “The idea that a student shouldn’t be expected to learn anything own their own, they should expect to be taught everything they need to know.”

    It’s curious that you are so eager to offer the full financial support of taxpayers to pay for health care, housing, and other types of services for adults lacking the bandwidth or other cognitive skills to handle their own lives. Yet for children still developing their full cognitive potential you’re willing to throw to the wolves and just tell them to Google what they need to learn in school. Maybe you’re overestimating the abilities of the general student population and basing your ideas on education policy assuming that you’re the average person. ;) Most people probably don’t have the initiative and smarts to Google their way through school. Also, some direct instruction in math could go a long way toward enabling more students to graduate high school knowing basic algebra, thus being more employable than they would be otherwise.

  138. And I have to thank the posters here who have remained in or returned to the work force with small children. Your comments have helped me in conversations with young professional women who are struggling with that issue, especially when they calculate how much of their salary will be devoted to child care. I’m all for supporting women in their choices, but I see how well many of you have managed in designing a professional path that really works for everyone in the family (even if not perfectly) and I encourage the young women to try to think past the immediate hassles of nannies and day care and sleepless nights.

    So thanks!!

  139. Also, some direct instruction in math could go a long way toward enabling more students to graduate high school knowing basic algebra, thus being more employable than they would be otherwise.

    A valuable skill would also be the ability to find the answers to questions and solutions to problems when you don’t have someone holding your hand. I think there is room for both approaches.

    The other part of it is dealing with the world as it is rather than as you wish it would be. You’re going to have sucky teachers and sucky bosses and you need to be aware that you occasionally need to take the initiative to do things on your own if you want to succeed.

  140. CoC, I agree with you that algebra and many other disciplines need to be taught step-by-step. But on “developing their full cognative potential”, I don’t understand your last post. Isn’t the ability to think creatively, problem-solve, and ask good questions part of the abilities kids need to develop? Subjects that rely on convention, like math, can’t really be discovered in that way, and a history class that handed students artifacts and texts from ages ok would move far too slowly. But I do think it’s a good idea to have students spend a few days with something like these transcripts of interviews with eie who experienced a war in the colonies, as well as other materials from the incident, to understand where the history in their textbooks or on the web comes from. https://catalog.hathitrust.org/Record/000773218 Similarly, for tech, having the instructor set up assignments in which students will learn specific principles, building on what they learned in previous tasks is hardly “throwing them to the wolves”. How do you suggest students develop those skills?

  141. I can’t imagine a teacher giving step-by-step how to assemble something and write a program. That would be like a writing teacher telling them their essays, one sentence at a time.

    But this assumes the students know how to program. You wouldn’t expect students to write an essay if they don’t already know how to write a sentence.

    On the other comments, the class definitely isn’t promoted as “independent study” or anything like that. For a class like this, I would expect the teacher to teach the programming that they need to use throughout the course. I don’t think they should be expected to learn it on their own. I don’t think they should be given the specific code for each assignment, but they can’t write a program on their own if they don’t know the basics.

    The robots are kits and for the first few, they simply followed instructions on how to build them. Now they are having to make changes and modifications to do other tasks. I don’t think this is unreasonable from what the teacher told us.

  142. I don’t think medical school needs to be that complicated of a choice financially. Yes, it costs a f#$% tonne. Few schools offer need or merit based aid. Public schools are cheaper, but still crazy expensive. And you delay “good” income for nearly a decade. However, you can choose to work for the VA, IHS, public health clinics and easily pay off your loans. You can be an academic. Or you can follow the money and by a summer house and a boat. There is a wide spectrum of financial outcomes with and MD, but if you are in the 10th%ile or higher, you can do good, do well or both.

    (As an aside. My remote work is for a government facility. People within medicine often assume I do it because I make great money there due to it’s undesirable location. However, I make about 30% less per hour than I do in my regular job. However, I get to travel to a weird wild place, someone pays all my expenses, and I get to help people who really need my help. I get a paycheck at the end of my sojourn that makes up for the inconvenience. Sometimes I feel like I won the “do good” jackpot).

    A family practice doc working for the VA is going to bring in at least 100k. You can service your loans, save for retirement and pay your mortgage on that. (Caveat: carribean medical schools are crazy expensive and do not guarantee a path to medical practice – that can be a financial disaster.)

    My issue with medicine (and why I won’t encourage my kids to pursue it as a career) is that you are locked in from the first day of medical school. It is really impossible to understand the job until you are 300k and 7 years into your training. There is little room for professional growth (financially or otherwise) after you enter full time practice. Big parts of the work are soul-sucking.

    However, none of these are financial arguments.

  143. DD, active learning certainly isn’t time for the teacher to file their nails. I think the guy I described really gets it right. Lecture is very rare. He is almost always talking to students, either one on one or a couple at a time. If they’re having trouble with, say, the gear ratio in their robot, he might have them put two gears (different sizes) together, turn one a full rotation and count the rotations the other makes. Once they get the general idea that the little one goes faster, he’ll tell them the formula they need to apply in working with their robots and then leave them to do it. They struggle a bit, of course (does anyone swish a basket their first time out?). He will keep an eye on them and if they haven’t figured it out after, I don’t know, ten or twenty minutes, he’ll talk to them again. It’s like if my high school geometry teacher had turned between me, frequently pages ahead in the homework and deriving the next theorem, and the girl next to me, who just did not get it or come over to my desk two years later, when I was trying to do calculus without Algebra 2, and filled me in on the concepts I’d missed that worked together in the calculus thing we were learning. Would’ve been a whole lot more effective for both of us than what we were doing, which was knuckling through on brute rote memorization. How do you think he should be teaching?

  144. SM, I think he should be teaching them the basic concepts they need to be able to build and program the robots. Again, it seems like he’s expecting them to write essays without first teaching sentence structure. Obviously there will be a lot of independent work in the class, but the teacher should teach the fundamental concepts and not expect them to learn everything on their own. That’s what his job is.

    And again, he said he realizes he needs to be more hands-on than he has been and will do so.

  145. SM, I see two flaws in his plan:

    1. He didn’t properly explain to the kids what the process was going to be. His plan seems to have been for the kids to teach it to themselves and if they have questions or run into a problem they should ask for support. That message wasn’t properly conveyed.

    2. If 10 out of 14 fail then his system has failed and he needs to stop and asses what went wrong and not issue those grades.

  146. If 10 out of 14 fail then his system has failed and he needs to stop and asses what went wrong and not issue those grades.

    No argument there!

  147. More hands-on, certainly. I hate it that this teaching method gets a bad rap from teachers who can’t find the sweet spot between teacher-centered and “throwing them to the wolves” because done right, I think it is incredibly effective.

  148. What DD describes is below the level of what my kids get even as an after-school activity! That’s like setting them loose in a chem lab with instructions to, say, go make nylon, without providing any info on the components or reactions involved. I would be *pissed*.

    Yes, kids will ultimately need to learn to do things on their own, but they need the building blocks before they can even figure out the right questions to ask. You need some combination of teaching basic principles/tools + demonstration/controlled experiments + room to try and fail and rework on their own + support if they are getting too off-track.

    Real-world example: I know a company that believed very strongly in individual responsibility etc. So their approach to implementing this particular compliance program was to give everyone some initial training and high-level explanatory documents and then say, “ok, guys, your responsibility, go figure it out. If you have questions, here’s the guy we’ve appointed as the subject-matter expert.” No serious ongoing training, no corporate HQ support, no template programs or tickler systems — just “make it so, and oh by the way, if you screw it up, you’re fired.”

    Not surprisingly, this company had significant compliance issues, because the front-line people didn’t even know enough to understand when they needed to ask for help from their designated support guy. They didn’t know what they didn’t know.

    This discussion reminds me of the conversation about whole language vs. phonics, or writing techniques vs. “they need to know facts/data to have something to write about”: you need both. People need a basic framework and basic understanding of the “rules” of whatever game they are playing in order to be able to build on that, discover core principles, be creative, etc.

    Tl;dr: you need to understand what the rules are to break them effectively. There’s a reason we send kids to school to learn from people who have been trained in instructional techniques, instead of simply handing our kids an encyclopedia or turning them loose with Google.

  149. There’s a reason we send kids to school to learn from people who have been trained in instructional techniques,

    No one is saying any differently, although DD’s son’s teacher seems to be trying to wing it on this particular instructional technique. He doesn’t seem to understand that not giving a Power Point lecture on something does not mean not interacting with students. That’s why I detailed a guy who I think does it right. It’s essentially the ultimate in differentiation, with guided hands on learning. I’m still not clear on where DD is on that, if he wants lectures. But clearly what’s been happening in that classroom is not enough.

  150. Lfb said what I would have said about the robotics fiasco. It sounds like an extracurricular club, not a graded for credit class.

  151. @tcmama – One of my college roommates was in a similar position as your DH, but chose the #2 school. She ended up working for the State.

    MBA’s are different from other – unless you really want to be in a big $$ consulting job where the Top 10 FT program contacts are invaluable, most people get their employer to pay all/part of it and go PT. I decided against that route years ago because I didn’t think the cost/benefit was worth it to my career prospects/ambitions. I haven’t regretted it either. I don’t know if I would even want to go to an Exec MBA program at this point if it was free. I like leisure. ;)

    I was under the impression that a lot of the people who work as gov’t lawyers out of law school do it for the experience/contacts and doors that it will open in the future. Especially States Attorneys/Public Defenders/Public Guardians. Maybe Fed too – although the people I know have gone from BigLaw to the Fed Government as a downshift in lifestyle (and salary) after deciding BigLaw was too intense.

    I have no plan to pay outright for grad school or professional school for DS, for the reasons here. He will be in his 20’s at that point, and he will have to fund/control his own life. I’m certainly not going to delay my retirement to do so (although I may delay my retirement to buy a nicer beach condo).

    Maybe I am too blase about college costs, but having only one – I’m really not that worried. We have always saved a bit in a 529, we hope to own our home outright at that point, and if our income remains flatish – that would allow us to pay for some great schools out of cash flow. If something happens in the 10 ten years to derail that plan, I’m not sure that not paying 100% for Harvard is going to be our biggest issue to solve. In that case, he’s probably qualify for some need-based aid, and his future won’t be ruined if he has to take out some loans and go to the local commuter school.

  152. BTW – DD, I am interested in what happens with this Robotics class. I just don’t have much to add. But I want to keep getting updates!

  153. “would love Drexel. Unfortunately, I don;t know if he could get any merit help there.”

    I suggest taking a closer look. When DS identified BU as a school that ticked many of his boxes and also offered NMF aid, that led us to Drexel as a school with a similar profile, and IIRC they also offered NMF aid.

  154. “On Crazy Ex-Girlfriend, they refer to Emory as the H of the S.”

    That’s the show that led DS to ask me that question.

    As he related it, a character on the show was accepted to Emory, kept telling people he’d been accepted to the “Harvard of the South,” and people kept thinking he meant Duke or Vandy.

    I’m not sure there’s any school in the south worthy of that moniker. The one school that comes to mind as the “Harvard of the ” is LSJU, but they don’t think of themselves as that; they think of Harvard as the LSJU of the East.

    Extrapolating, I’m thinking that any school that thinks of or bills itself as the ” of the ” is really a wannabe.

    “I’ve heard Rice, Duke and Vanderbilt referred to as Harvard of the South.”

    Do Texans consider Texas to be part of the south?

  155. ” Big parts of the work are soul-sucking.”

    I guess that makes sense what with the drive to digitize records and do a bunch of things to run a practice and get paid through medical billing, but that statement also makes me sad. If there is a profession that you should feel like you are doing good on a daily basis, I would think being a doctor should be it!

  156. “our retirement plans do assume parental responsibility for college.”

    Back OT…

    “Responsibility for college” can cover a wide range.

    Keep in mind that college costs can vary widely, and a lot of schools are currently in the >$65k range.

    OTOH, there are a lot of in-state options for half that or less.

    It can throw a wrench into your retirement plans if you plan in-state and your kid(s) get accepted to HSS without aid.

    From LfB: “when Harvard says yes, you don’t say no”

  157. “But most first-year law students did not decide to fork over $200K over three years”

    What kind of law school do you get for that much?

    DS and I looked at a couple of law schools (at HSS), and the current cost is in the low 90s/year.

  158. “a guy who got an “economic diversity” scholarship to Harvard for his undergrad.”

    He got need-based aid, the only kind Harvard gives.

  159. “For an MBA? I’ve been told it’s almost impossible to get into a “good” MBA program without professional work experience these days.”

    Does any school have the equivalent of the BS/MD program for MBAs these days? I was accepted into something like that as a HS senior.

    Does anyone know of BS/JD programs? Any thoughts on those?

  160. Yes, I think Texans think of themselves as Southerners, but like to be considered Westerners when it suits them (speaking as a Texan for a chunk of my life)!

  161. Oops, forgot that using less than-greater than signs causes web pages to look for html commands inside them.

    I’m not sure there’s any school in the south worthy of that moniker. The one school that comes to mind as the “Harvard of the [insert direction here]” is LSJU, but they don’t think of themselves as that; they think of Harvard as the LSJU of the East.

    Extrapolating, I’m thinking that any school that thinks of or bills itself as the ”[insert HSS here] of the [insert direction here] ” is really a wannabe.

  162. “I like leisure.”

    I believe the appropriate totebag terminolgy is that you have a preference for leisure.

  163. “DS and I looked at a couple of law schools (at HSS), and the current cost is in the low 90s/year.”

    Really? Holy crapola, totally not worth it at that rate.

  164. I’m still not clear on where DD is on that, if he wants lectures. But clearly what’s been happening in that classroom is not enough.

    I don’t think the whole class should be “lectures”. Obviously a class like this needs to have a lot of hands-on work. I would like to see a lot of “direct instruction” up front so the kids get a good foundation, and then they can use those skills to move into more advanced projects.

  165. If I were teaching robotics (DS1 is in a low level program), I would encourage multi-age groups and mentoring of younger kids by older kids. DS1 works with his teammates to do elementary age robotics competitions but he enjoyed watching high school teams compete.

    I am pondering volunteer activities that my middle/early high school boys could do in the summer as an alternative to fighting with each other. “Robotics mentor” at a summer program that offers that might fit the bill.

  166. I agree with WCE. In that sort of situation, the older kids will also benefit from teaching the younger kids.

    “I am pondering volunteer activities that my middle/early high school boys could do in the summer as an alternative to fighting with each other.”

    BattleBots?

  167. My dept in the Texas Panhandle used to joke about being the Princeton of the Prairie, fully cognizant of what Finn says about wannabes. Vandy has history and Southern manners, but I don’t think of it as being in the same class academically as Duke or Rice, probably because of the grad programs/research at the other two.

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