LOL... nope .. not a liberal. Actually favored Mitt Romney during the last election, but admittedly couldn't support McCain. You misunderstood my argument. I'm not claiming that the colleges are great. I graduated from one in which I was repeatedly schooling the professors during class. My point was that before the child even gets to college they have been failed by those who were supposed to help direct them to the appropriate course. Parents aren't involved enough in their child's education through high school. We have millions of kids graduating high school who have no idea what they wish to do for a career. "Don't worry, you'll figure it out during college." Then they spend the next seven years in college switching majors and learning very little. Indeed, our college system is designed to allow them to "keep their options open" by filling the schedule with numerous pointless required electives. We live in an age of specialization. It serves no purpose for a person to know the basics of many different topics. He must become a specialist in a single area. In a typical 4-year program, almost two full years are spent completing coursework that has nothing to do with the student's chosen field. That is nonsense, and one of the main reasons for it is to help students broaden their horizons. It is complete nonsense. By the end of high-school a person should know generally what they want to do with their life. They will then know if college is appropriate. If it isn't, then they shouldn't waste their time and money.
If all you are trying to say is that a retired couple can live a very nice somewhat above-middle class life in a low cost of living area if they have around 2M in investments and paid off homes, I agree. However this is not the same as having a 2M cash and nothing else - Then being able to recreate that lifestyle from scratch. Nothing you said has disputed the truth of this statement. Home values? Our hypothetical person would need to use a big chunk of that 2M to buy two homes. (Don't forget all the transaction costs/fees!) Deduct this amount (400, 600, 800k?? (being conservative here)) from 2M -I just looked a teacher's (family members) pension. Market value on it is about 400K. This is for a teacher who had not even worked a full 20 years and benefited from the full package kicking in. Deduct this from the 2M. -Present value of SS benefits and government oldster subsidies? (Does not matter if they currently "need" it or not, it is part of their security blanket and net worth. If they lost this cushion unless they were fools it would cut their spending in other areas.) No idea of the value but it could be determined. I can't see it being any less than a few hundred thousand, likely more. Lets be conservative and deduct 200k from the 2M. -property taxes? Do you know when they were last assessed at both homes? If not current a new assessment could leave them feeling hosed and increase the value of their future tax liability substantially (A new buyer would almost certainly face this). Vacation home taxes in particular can really skyrocket on a new assessment. (wild card, not including) What do you know, we are left with far less than 2M! NO shocker! As I stated, this couple has a genuine net worth (ALL assets minus liabilities) of significantly over 2M. You just are not able to see it, likely because like many people you had no idea small pensions, SS, and Medicare have significant present value. However, I admit I am perplexed about your complete unwillingness to factor in the real estate into their net worth (the funds required to reproduce the lifestyle). As to their portfolio values: -most their money is in real estate? In other words, it is impossible to know exactly what their investments are worth. Regardless, direct real estate investment is usually more a side business that relies on expertize rather than simply a passive investment. -realistically: "good directional stock investment" is a crap shoot for a retired person. Might work out, might not. -We would need to know the extent to which their wealth is being annuitized to cover living expenses. -You fail to see that what they spend the $$ on is not relevant. People make spending choices based on their TOTAL circumstance. If the "security blankets" (that they currently give to charity) were taken away, unless they were fools they would downscale their spending in other areas, thus impacting their entire lifestyle. ------ So in conclusion, as I stated, this couple (assuming you have any ability to accurately assess the equity position they have in real estate) is worth significantly over 2M. How can a net worth well over 2m be funded "starting from scratch" with 2m? I am not sure you can explain that, because it is not possible. .
Not trying to be an elitist, but I am a realist. Some people are smarter than others. I know it sounds great to teach our children that they can do anything they set their mind to, but that isn't reality. The reality is that teaching them this is just a hope that they will reach their full potential. Many kids claim to want to be a pro NBA player. In reality, few of them even have the potential to play at that level, even if they practice for 8 hours a day. Sadly, I can name about a dozen guys from my high school class who never realized their full potential because they became so convinced that if they just put their mind to it, their NBA dream was possible. Consequently, they spent (or wasted) countless hours practicing and about 1/2 even played in college. Those who didn't go to college, spent just as much time practicing in hopes to walk-on at a JC, then progress to a university. These weren't stupid athletes either. Normal, above average intelligence. At some point, the reality is that their dream is just a dream, and trying harder isn't doing them any favors. If a trusted adviser of some kind would've simply told them that, straight up, it might have hurt, but they might still have realized their potential. We don't do them any favors by patronizing them once it becomes obvious that they are wasting their time.
I understand what you are saying and I agree with some of your points. All I'm saying is that starting from scratch and with $2M in cash and being 30 years old. I could comfortably live the rest of my life in a well established rural area.
Well, the reality is also that unless you are trying to get into a "binary" profession where you are either a star or a nobody (sports and arts are the two most notable examples), you can get pretty far on sheer discipline and tenacity. For example, there are plenty middle managers that made it there not because they are ultra-smart, but because they worked their ass off. I've seen a lot of them over the years on Wall Street. Guess what - a Harvard degree helps even though the guy could be community college material. PS. nitro is right, you are an elitist and an undeserving at that, too.
I am perplexed how anyone can surmise an elitist attitude from your posts. Reads like hard core reality to me. surf
Well, I don't really expect you to know enough about me to determine whether or not I am an elitist. Not really sure what you meant by undeserving. I'm assuming you mean that I either don't deserve to consider myself elite, or that I don't deserve to be "elite". Again, you don't really know anything about me. But you're entitled to your opinions. I will offer a rebuttal though in my own self-interest, and you can choose to believe it or not. When you say elitist, I define it as; 1. A person who believes that they are superior to others (and thus deserve favored status) because of their intellect, social status, wealth, or other factors. 2. Somebody who believes that society should be ruled by an elite class. I am strongly opposed to #2, as I think that it leads to one of the worst forms of government imaginable. So I am disqualified on those grounds. In terms of #1, I don't really presume to be better than any given person at anything. I am decidedly average at most things. I graduated from a state university, and not at all one that is considered prestigious. My vocabulary isn't great. Growing up, my parents were so poor during a certain period that I pretty much lived off oatmeal and green beans from the garden. I remember my mom cutting cardboard soles after wearing through my shoes. I work about 14 hours a day, don't take handouts, and pay my debts. I don't expect any favors and I will always work hard enough to make sure that someone feels they are getting a good deal. Honest day's work for an honest day's pay. I drive a '97 ford explorer because I place little value on the appearance of wealth. If my wife didn't randomly buy clothing for me, then I would still be wearing the same clothes from 1999. Like everyone else there are certain things that I excel at. I prefer to surround myself with those things because that is where I feel most productive. I don't think it does anyone any good for me to be doing something that I'm not all that good at. I enjoy watching someone do something that I'm certain I couldn't do, even with significant effort. I don't believe that all people are capable of performing similar tasks equally. Everyone has different natural abilities. I think that pushing someone into a situation where they are certain to under-perform is damaging to their life. They are much better served by discovering what they happen to be good at and beating expectations consistently.
Maybe because I said I favored Mitt Romney during the last election, and he is considered an elitist. Given the circumstances and with 20/20 hindsight, I still say he was the best choice, despite his flaws. No really it is probably because you are an elitist too, so you just don't recognize it.