Tuesday, February 14, 2012

The Bureau of Specious Statistics, Vol. II


Another McNews Story from MSBC.  Again, bad news sells and gets people depressed, so they buy soda-pop, happy meals and SUVs.  Selling eyeballs is the name of the game, so get 'em good and depressed and watching!

The above chart looks alarming!  The elderly are spending more than they are making!  They will go into debt and never get out!

Relax, Cletus and take a math pill.

Using the 4% rule, you can take money out of your retirement accounts and spend it.  So yes, over time, your will not only be spending your income, but also part of your principle.  Guess what?  You die eventually anyway, so it's OK.

That, or go into assisted living, which likely will mean Medicaid will kick in to pay for it - once you have exhausted all your funds.  So there is no harm in spending your money, once you retire, according to a predetermined plan, like the 4% rule.

The folks on the left of the chart are not in peril, they are doing OK and spending their wealth, right on schedule.  They are not "falling behind" as the chart title states - not necessarily, anyway.  If you have planned your retirement properly, you will be spending slightly more than your income and be tapping out your savings, over time.  This is normal, not alarming.

On the right side of the chart would appear to be the happy story, but is really the sad one.   These are people who SHOULD BE retired, but are forced to work longer because they cannot afford to retire.  Notice how much more they are making than spending - nearly ten grand a year.  They are trying to play "catch-up" in their golden years to build up a retirement account that should have existed in the first place.

So the people on the right side of the chart are the folks we should be alarmed about.  They represent the "working poor retirees" who are forced to work well into their 70's because of poor planning.  Expect this group to increase in size, over time.

So, like the story on declining revenues (that neglected increasing profits), MSNBC gets it all wrong, once again.  I really would not rely on these people for financial advice - they are journalism majors, after all.

Poor Normative Cues - shot out of a fire hose into your brain!

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