A small rant about bad retirement options

It all started when we asked SIL if she could open a 529 account for her second child so we could contribute to it as we’d been contributing to that of her first child.

She told us that her financial advisor at work had told her not to open a second 529 plan.  I wondered at the quality of that advice as we’d recently done an ask-the-grumpies post on that very topic.

DH asked who her advisor was.  Turns out it’s some company named AXA.  If I say too much that’s terrible about AXA, their lawyers will likely contact us, just like they did the owner of the finance for teachers site.  AXA features (along with a similar company named Legend) in the  NYTimes article(s) below about 403(b) plans that are a terrible deal for teachers because of their high fees and lock-in periods.

It makes me so mad that we’re doing this to our teachers!  Especially since teachers from my parents’ generations have great defined benefit pensions, while those starting out now are, like the rest of us, largely dependent on putting money from our take-home pay into defined contribution plans.  It is terrible that for many of them, their only 403(b) options are eating away at their retirement savings with high fees and bad advising that pushes them into higher fee funds.  K-12 teachers (especially those who aren’t high school math teachers and maybe should know better) should be able to trust that their employer is going to pick out a good plan so all they have to do is save money for retirement.  Why can’t TIAA-Cref manage more K-12 403(b) plans?

I mean, it’s bad enough that my FIL’s company uses Edward Jones.  (This summer upon retirement, he informed me that he would be saving 10K/year rolling over his retirement assets to Vanguard on retirement.  My MIL noted that’s equivalent to 4-5 online classes she does not have to teach.  Made that generous $200 donation his EJ broker gave each year to his local hunting club fundraiser seem pretty negligible.)  I am so glad we got him that Bogleheads book on investing after his nth email asking us about some risky single stock his EJ broker was pushing on him.

Do you have decent 401(K)/403(b) retirement options at work?  How big are the fees on your plan?

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There really is a big difference between comfortable middle class income and upper middle class income

One of the things that annoyed me about some advice for working women is the insistence that if you were making more than 100K you should just buy all the things that make life easier, with an underlying current of it being ridiculous if you didn’t.  The person giving this advice, of course, has a husband who makes substantially more than 100K on top of her own 100K+ income.

During our brief time when DH and I were both employed full-time and we were making upper-middle-class $$ (remember all those irritating posts on “what should we do with this extra money now that we’ve maxed out our 401K” etc.), it became really easy to see why when you’re making that much it is easy to believe that just spending money is the solution.  When you’re making upper-middle-class incomes for long enough (and don’t go crazy with spending on really big ticket items) you really can just say yes to everything.  You don’t have to worry about having a large precautionary cushion because in the case of an emergency, next month’s income will refill the gap, or maybe the month after that.  The answer is always, “yes, we can afford that — even if the roof falls in tomorrow, we’ll be fine.”

But now we’re back to having a comfortably middle-class income on my income alone.  Technically we’re in the long unpaid summer, so we have 0 income, but even with DH employed I saved up for the unpaid summer in case he lost his job (and in this case we saved a bit more than that because we knew there was going to be a layoff… and we, you know, had extra money after maxing out retirement).  And now if we want to spend randomly large amounts of money on something, we have to think about it.  We can have some of the things but not all the things.

So… we could get a new car, that’s in our emergency fund (recall mine is 12 years old and has been having regular issues, DH’s is 11 years old but seems fine), but we couldn’t do that and renovate the kitchen, unless we wanted to sell stocks, at which point we’d be depleting our secondary emergency fund.  So, technically, we could have both, but potentially sacrificing our future security for wants.  And since we spend close to my take-home pay when I have income, it would take a while to replenish our emergency funds without cutting back.  We could buy a refrigerator even though the old one isn’t broken and/or I could see a dermatologist to get skin-tags removed and/or hire a personal trainer and/or have someone else fix our sprinkler system and/or eat out every day and etc. etc. etc. on top of all the things we already spend money on but we can’t do all of those things without dipping into savings or cutting down on our tax-advantaged savings.  We have to make choices that involve money, not just time or desire.

We have to think about where on the need/want spectrum something is.  And thinking about that takes effort.  It’s easiest to default to “no” unless something is important or the cost truly is low.  And yes, sometimes it is worth it to pay for help– DC2 is still in daycare even with DH laid off.  But that doesn’t mean that decisions are obvious and easy.

This is true even if we’re still spending a little bit under what we earn, because we can’t predict emergency expenses in the future.  When the gap between earnings and spending is really large, the emergencies aren’t that important.  When the gap is small, those emergencies could set you back, so ironically, you need a larger emergency fund when you earn less than when you earn more (assuming similar spending).  And it’s harder to refill that emergency fund with a smaller gap, meaning you have to cut back more on spending when you’ve got an emergency.  But most likely, the spending that you’re cutting back on is stuff you wanted less than any new thing or service that you think you might want but haven’t purchased yet.

So no, I’m not saying that people making 100K shouldn’t buy things that make their lives easier.  Just that when you’re making 2 or more times 100K, it’s nothing to say “are you crazy, why wouldn’t you buy that?” Purchasing “that” is a bagatelle in comparison to income.  But when you make less, you have to prioritize and not just on really expensive luxuries.

I’m also not saying that 100K is nothing!  It’s a comfortable income in most of the country (yes, you probably do need a bit more to comfortably support a family in some coastal cities, though probably not as much as most people who complain will tell you) that pays for all of your needs, lots of retirement savings, and lots of wants.  But not all the wants.

Being breadwinner

can be stressful

Right now #2 and I are both breadwinners of our respective family units.  In case you were wondering about #2, after her FIL died, her DH got very depressed and is taking a break from paid employment.  There’s probably a bit more than that, but it’s not my story to tell.

This isn’t the first time I’ve been the sole income of the family– if you recall, DH quit his tenure-track job without anything lined up, so for a few months we weren’t sure what our income situation was going to be like until he got employed.

One of the first things I’ve noticed about being breadwinner is that I feel the need to increase my income.  Asking for raises, getting grants, taking consulting opportunities, all of these seem to be more important now than when DH is also bringing in cash.  Getting my research done and out so that I can be more attractive should we need to move takes on greater urgency.

Combined with this, I let DH take on greater responsibilities at home.  We already have a pretty egalitarian household, and when DH isn’t earning, he starts taking care of more of the daily and weekly chores, especially kitchen stuff and chauffeuring.  And I feel less guilty about him doing so.  I imagine this is how some women get shunted into home production even when things start out equivalent.  I do spend more time on our finances when I’m the only one earning, but it doesn’t make up for the time I’m no longer spending on regular chores.

I do like having DH take care of things at home, but I also like the stress of not being the only person earning money.  I think I like it best when we’re both enjoying our jobs and earning a lot of money.  I would like it least if I disliked my job but had to keep my job because mine was the only income.  My next least favorite would be being the homemaker if DH was the sole breadwinner and hated his job.  I’m not sure how I would rate hating my job vs. being a homemaker if DH was happy with his job.  I guess it might depend on how easily I could find a new job in that situation.  I suspect that I would rather have each of us make 150K than have DH make 300K with me required to make nothing.  I might prefer making 300K myself and having DH at home to either scenario though.  (Note:  I am happy to test any of these three propositions!)  Smaller dollar amounts would probably lead to different preferred combinations.

As we’ve noted before, this time we’re in a better position than last time DH stopped bringing in income.  As I look through that old post discussing what to do with finances, I am happy that we don’t have to move so much around.  There’s no mortgage to stop prepayment on.  No private school to save tuition for, no mother’s helpers to pay (though we do have summer camp and daycare throughout the summer).  No IRAs to fund (though if DH’s jobless situation continues, I will be eligible to contribute again).  And we have a nice cash cushion.  My plan is to convert this cash cushion into tax-deferred savings (by continuing to max out my 403(b) and 457, even as we dip into savings) with the thought that doing so will make us more likely to be eligible for financial aid when DC1 goes off to college.

I also don’t know how long I am going to be the breadwinner.  DH’s company is supposed to be getting back on track in July, but i’s have not yet been dotted nor t’s crossed on the contract that will put the company back to work for the next couple of years.  We can wait, as can DH’s direct boss, but much of the rest of the company cannot afford to take more than one month unpaid.  If waiting for the contract lasts too long, the company might just go under and the contract will fall through entirely.  My bread-winning this time around may end up being longer term than we had hoped.

Have you ever been the sole breadwinner of a multiple-person household?  How do things change?  Do you feel stressed?  Do you have a family income combination that you prefer (breadwinner/homemaker/dual-income, etc)?

Things that negatively affect my mood

Lack of sleep

Lack of a feeling of control/feeling overwhelmed/being told I have to do stuff or that I’m not doing enough stuff

Having future deadlines but not being able to work on them even though I planned to work on them because other people have dropped the ball and there’s nothing I can work on in the meantime while I wait because I already did it all or I would have to get into the mindset for a completely different project and I just don’t have that mental load and I know everybody is going to get back to me at the same time too close to multiple deadlines and I’m going to be stressed out.

Eating sugar or refined carbohydrates and sugar-crashing

Low blood sugar more generally

Mild tummy aches/headaches

impatient drivers behind me who want me to risk my life making a left turn across traffic

Sometimes hormonal imbalances

Whining (other people’s not my own, and literal whining)

Mansplaining

Did I mention people flaking out on me?

Grumpy nation, what harshes your buzz?

Live-blogging my cyber security awareness training

an IM chat with my partner.

ME: and now, for sauce, an hour-long video training on ‘cyber security awareness’.
WHY WHY WHY are there so many videos I HATE VIDEO TRAININGS
just write down the things that everyone under 50 knows, and it’ll take 5 minutes to read.

[#2 notes that Grumpy Rumblings does not endorse tired age stereotypes about technology knowledge or lack thereof.  Workers over 50 ALSO know this stuff.]

PARTNER: not all employees are under 50 :)

ME: “Don’t answer phishing emails” DURRRRR
durrrrrrrrrrrr
don’t share passwords durrrrrrrrrrr
Partner, did u know that phishing emails are common?
This ‘cyber attacker’ is wearing google glasses

PARTNER: they do that!
ME: do they???
PARTNER: no

ME: hey if a stranger calls u on the phone and tells u that ur computer is infected and u need to go buy this software to fix it… durrrrrrrrrrrrrrrrrrrr
“Simply hang up the phone or ignore the email.” This is some quality sh*t.

PARTNER: well, taunting them wouldn’t be very professional

ME: hey another unit about email
DO NOT OPEN THE ATTACHMENT
also the ‘cyber attacker’ is a man of course
o wait, this one’s a woman– also wearing google glass

here’s a hint: your bank’s not going to ‘deactivate’ your account.

This envelope is vibrating. I wouldn’t open that.
“Browsers are one of the primary ways we interact with the internet.”

PARTNER: good to know
ME: right?

“Should you heed security warnings?” gee what a hard quiz

“social networking websites are one of the most exciting technologies on the internet!”
this is definitely written BY 60-year-olds, FOR 60-year-olds.
oh no that guy got a fishing hook through his FACE

[#2:  See above disclaimer.  60 year olds who work have gone through more of these security trainings than #1 has.  They are aware of social networking.]

PARTNER: ow
ME: your friend doesn’t actually need you to wire money to him in Romania
PARTNER: I dunno, sometimes my friend is in Romania
ME: and they can only contact you via facebook?
PARTNER: well, probably not.

ME: also this video has bad grammar.
ooooh kidnapping your child, that’s definitely the item choice I’m picking.
I thought we were going to learn about encryption there for a minute, but no. That would be much harder than “don’t click that link, yo”
“Not only can you call anyone IN THE WORLD” using your cell phone… go figure.

PARTNER: well, usually I can’t call you, actually.  [This is because #1 is the only person left in the US without a cell phone.]
ME: in the WORLD, Partner.
hahahaha “never jailbreak your own phone”

PARTNER: then teh haXX0Rz will pwnz you!
ME: don’t go to http://www.EvilAntiVirus.com — I bet you shouldn’t click on that link
PARTNER: Firefox can’t establish a connection to the server at http://www.evilantivirus.com
ME: sad
the section on passwords promises hilarity
oooh passphrases. Use numbers in place of letters. Are you listening, 60-year-olds? [#2:  60 year olds probably have as many passwords as the rest of us non 60-year olds]
PARTNER:  31337!
the password ‘p4$$w0rd’ is totally uncrackable!
ME: hey don’t use your banking password for youtube
PARTNER: but then how will I remember my youtube password?
ME:  o noes
never share your password, Partner. It is a SECRET.

PARTNER: Keep it secret. Keep it safe.
ME: Enable “Hobbit-level” security.
Don’t send important secret work information to your personal email

PARTNER: but how will I get it home?
ME: Don’t log in as root unless you need to…
this guy seems to have an RFID chip embedded in his clavicle
that seems… not-ideal
PARTNER: ow

ME: don’t install software that has the Jolly Roger on it.

PARTNER: but I really liked Assassin’s Creed 4
ME: me too!
“These steps should be applied in a way that is consistent with our policies.” no, really?
argh, grammar.
hey that loud-ass bird is back, the one that likes to sit outside our window and look at us. What’s up, loud bird?

PARTNER: tweet
ME:  “Which of the following is a typical step that an attacker will take after compromising a system?

A. Installing Microsoft Office on your system.”
ha!

“If you believe your system has been compromised, you should: A. Continue using the system so the attacker does not become suspicious” — YES, YES, pick that one

WITH GREAT POWER COMES GREAT RESPONSIBILITY

This data management policy is laid out like a football play. Am I the running back or the tight end?

“We hope you enjoyed your security awareness training.”  NOPE.

PARTNER: thaT DOES NOT CHANGE THEIR HOPE THOUGH

ME: hahahaha
“Remember, our goal is not to scare you from using the internet.”
“Technology is a tremendous tool that enables you to accomplish amazing things.”  Ok, Grandma.  [#2:  Most grandmas are well aware of facebook and skype etc.]

[end.]

Later, my co-worker started the same online training and spontaneously burst into giggles.  “Welcome to the 21st Century?” she asked.  “It gets worse,”  I told her.

#2 notes that her IT training just switched to slow and stupid.  No skipping to the quiz anymore.  No just reading the slides and fast forwarding them.  Nope, you cannot move ahead until they’re done talking.   And it’s an hour and a half with a huge amount of useless prologue.  UGH.  So, of course, instead of actually paying attention, I’m just letting it run on my secondary monitor, clicking next whenever I notice a slide has finished (there are ~150 slides).  If they want me to learn something, this is not the way to go about it.

What’s the dumbest training you’ve been to?  How can we all be less ageist?

Minimalism has not caused enlightenment, only mild annoyance

This year, with the exception of children’s toys which seem to proliferate wherever we go (in this case to thanks to decluttering friends), we are living the minimalist life.  Why?  We’re going back to our fully stocked home in less than a year and don’t want to spend extra money on things we don’t need.  We make do.

We have settled down to having exactly what we need and pretty much no more.  What a simple life we are living.  How fortunate we must be.  To cut down to the bare necessities.  Unencumbered by the clutter of daily living in our 2 bedroom, 1200 sq ft apartment.  I could totally start a minimalist blog.

We only have one big pot and one small pot.  We have one big bowl, which means that sometimes the small pot gets repurposed as a mixing bowl for dry ingredients.   We spend a lot of time washing things for immediate use.  Or sometimes we just don’t make the thing because we don’t feel like cooking *and* washing right away.  I’m sure if I were a minimalist blogger, I would write something about how this makes me more mindful and in tune with the rhythms of something or other.  Immediacy.  Sadly, as an economist, my thoughts instead flow to the inefficiencies of being unable to exploit economies of scale.

It is a lie that minimalism saves time.  It is true that having too much disorganized stuff takes time.  But having “just enough” stuff also takes excess time.  Sure it is easy to find our one big pot– it is probably in the refrigerator full of last night’s dinner.  But having to repackage the food and wash the pot before cooking takes time.  And then the repackaging will eventually have to be washed.  One big pot is enough, but it is certainly not time-saving.  Minimalism takes time.

We could, of course, just not cook the second thing until we’ve finished whatever is in the pot.  But again, that does not improve our quality of life, even if it may be ideal from a minimalist perspective. We like a little variety.  The stuff in the pot will get eaten, but not exclusively for several meals in a row.

Minimalism means not having extra.  Not having extra results in sore feet if you don’t replace your shoes quickly enough. It causes you to wear damp clothing when the laundry didn’t completely dry. Or a kid to sleep on an uncovered mattress after an accident. Minimalism requires the kind of time and flexibility that only minimalism bloggers have, because that’s, you know, their job.

While it is great to be mindful about purchases and possessions, cutting down to the minimum is unnecessary.

I suspect most people have an ideal amount of stuff, and when stuff gets cut below that amount, they go on shopping sprees. So yeah, don’t buy stuff you don’t need, get rid of stuff you don’t use, but it is ridiculous to conform to some arbitrary standard that makes your life harder instead of easier.

Ask the grumpies: MLMs and facebook parties

Rented life asks:

What are your thoughts on MLMs and the abundance of facebook “parties”? My husband thinks the MLMs are being pushed on women/moms who makes less than me and the “freedom” sounds appealing to them even though it looks like more work than my 2 jobs!

They suck and your husband is on point.