WSJ Retirement Section 12/11/06

[REWahoo]

I completely agree that most magazines and papers are doing their part "marketing" rather than informing BUT,

I hardly think the writer, or any writer who writes like this is a moron. Check that, I believe these writers are writing for morons.

That may be a little harsh, but I'm with you so far...

Most people have no idea how to live below their means, have little or no debt, or delay gratification.

I'm still with you...

Are you telling me they are going to cut back on their lifestyle once they retire? Highly doubtful. Thinking expenses will go down for these people is a dream. They'll want the same if not more to "enjoy" their retirement.

They won't have a choice. They won't do it voluntarily or happily, but they will live on less because they will be forced to do so.

... the regular person is never going to be able to live on below 70%. To much "I want it now" in them.

It depends on what your definition of "live" is...

 

[tryan]

You guys are brutal ... so I'll add that any moron can see that your taxes will decline at least 15% (33% becomes 15% for us) and a retiree no longer needs to save (25% for us). Drop your mortgage and it's another drop in expences.

 

[MasterBlaster]

The guy in the office next to mine is currently cashing out his retirement funds, fees be darned to put a down payment on a house he clearly can't afford. Moronic to the nth degree. He will then be near 40 with no retirement savings, no college funds for 2 kids, 2 leased cars, etc. He couldn't ever live on 70% of his salary. No way, no how.

So even though I currently live on 60% of our salary, as do most of you(if not a lot less), the regular person is never going to be able to live on below 70%. To much "I want it now" in them. But they'll keep working while we have options.

I did quote somebody from this forum when after trying to enlighten my friend to no avail (after he asked me for advice)about taking money out of his retirement accounts by saying "Well at least you'll have to keep working, which will help my SS benefit down the road. He had that deer in lights look, but didn't disagree.

I know the type and have given up trying to help wayward souls find their way. Their values are so different than mine. They can work till they drop. I always get the - "Who wants money when you are old" blah blah blah

The only problem that I can see is that they can vote. And they can vote in legislators who will help themselves to part of your stash. After all you have so much and need to give up your "Fair Share"

 

[Mudd]

so I'll add that any moron can see that your taxes will decline at least 15% (33% becomes 15% for us) and a retiree no longer needs to save (25% for us). Drop your mortgage and it's another drop in expences. Tryan

I have nearly 20 years to go- I hope the lowest tax rate for me will be 15%, but the way this country's spending is going, that's no guarantee rates won't rise. I'm in the 25% now, when I retire, i bet I'll be around 20%

Most people aren't saving much so they really won't notice a drop from what they are "saving"

My buddy, like a lot of people will be lucky to have their mortgage paid for when they hit 70 years old. So not much savings there.

Maybe morons was a bit harsh, more like sheep. They need to follow and have the Mcmansion and luxury car, and fancy vacations. Fees aside, if there is anything that can get people saving more, than I'm all for it.

Mudd

 

[Nords]

My buddy, like a lot of people will be lucky to have their mortgage paid for when they hit 70 years old. So not much savings there.

Age 74 in my case, unless we get another once-in-a-lifetime opportunity to refinance for a lower rate...

 

[Bikerdude]

The only problem that I can see is that they can vote. And they can vote in legislators who will help themselves to part of your stash. After all you have so much and need to give up your "Fair Share"

You are so correct!

This how it will go down:

Congress is increasingly concerned about the growing number of elderly living at the poverty level. Most of these people are former middle class working people who have simply grown too old to work and cannot live on Social Security alone. President HR Clinton is urging Congress to pass her asset tax bill to help save these unfortunate people.

President Clinton was quoted as saying "I believe Congress must realize there are people in America whose incomes do not reflect their true wealth. The only fair way to raise the needed revenue is to tax the assets of these Americans. The great untapped revenue source in the form of asset taxing cannot be overlooked”.

 

[ZMAN]

I started the thread as my intro and the responses have been very helpful. I think Mudds recent post really nailed it for me. If, as the statistics say, the American savings rate is close to or less than zero then people are living at or above their current incomes. Thus they need 100% (or more) of current income at retirement.

This group (including DW and me), as savers, are essentially a different species. If you use credit carefully and rarely, and save the raises you are lucky enough to get, the "rule of thumb" clearly does not apply.

I spent the last few nights streamlining my catergories in Quicken to sharpen my understanding of my monthly expenses, which remain well below current income.

 

[macdaddy]

I read Hillary is planning to be called "President Rodham" when she is elected... we better all start practicing it now.

 

[LEX]

Confiscatory Socialists by any name are a true threat to those who responsibly saved and through personal effort have more than the 'less fortunate'. They gain power by reallocating the wealth of others to those who become their supporting political force. There is a real longer term asset preservation issue here IMHO. Besides inflation which is insidiously built into the system and functions as a surrogate asset seizure over time, the feds can and have found ways to take retirement assets, from double taxation to stealing it from your kids through the estate tax.

You are not paranoid if it turns out to be true that they really are out to get you! Perhaps this is a good reason to hedge your in-country assets and keep assets in more than one political system. Maybe buy a flat in Lucern or Zug and get to know your local banker.

 

[donheff]

I read Hillary is planning to be called "President Rodham" when she is elected... we better all start practicing it now.

I doubt it. She doesn't even call herself Hillary Rodham Clinton anymore, just Hillary Clinton.

 

[HFWR]

Rod 'em...

Gotta nice ring to it, don't you think?

 

[brewer12345]

Confiscatory Socialists by any name are a true threat to those who responsibly saved and through personal effort have more than the 'less fortunate'. They gain power by reallocating the wealth of others to those who become their supporting political force. There is a real longer term asset preservation issue here IMHO. Besides inflation which is insidiously built into the system and functions as a surrogate asset seizure over time, the feds can and have found ways to take retirement assets, from double taxation to stealing it from your kids through the estate tax.

You are not paranoid if it turns out to be true that they really are out to get you! Perhaps this is a good reason to hedge your in-country assets and keep assets in more than one political system. Maybe buy a flat in Lucern or Zug and get to know your local banker.

Woop, woop! Tinfoil hat alert!

 

[CCdaCE]

You are so correct!

This how it will go down:

Congress is increasingly concerned about the growing number of elderly living at the poverty level. Most of these people are former middle class working people who have simply grown too old to work and cannot live on Social Security alone. President HR Clinton is urging Congress to pass her asset tax bill to help save these unfortunate people.

President Clinton was quoted as saying "I believe Congress must realize there are people in America whose incomes do not reflect their true wealth. The only fair way to raise the needed revenue is to tax the assets of these Americans. The great untapped revenue source in the form of asset taxing cannot be overlooked”.

Confiscatory Socialists by any name are a true threat to those who responsibly saved and through personal effort have more than the 'less fortunate'. They gain power by reallocating the wealth of others to those who become their supporting political force. There is a real longer term asset preservation issue here IMHO. Besides inflation which is insidiously built into the system and functions as a surrogate asset seizure over time, the feds can and have found ways to take retirement assets, from double taxation to stealing it from your kids through the estate tax.

You are not paranoid if it turns out to be true that they really are out to get you! Perhaps this is a good reason to hedge your in-country assets and keep assets in more than one political system. Maybe buy a flat in Lucern or Zug and get to know your local banker.

... So, my question is... how are "they" gonna go about bleeding off any available funds from within Roth IRAs. I dutifully stick money in that honey pot, thinkin' it's virtually guaranteed that tax rates will be higher in 30+ years, though, all they've seem to do is go down in the past 30. Right?

-CC

 

[FIRE'd@51]

... So, my question is... how are "they" gonna go about bleeding off any available funds from within Roth IRAs. I dutifully stick money in that honey pot, thinkin' it's virtually guaranteed that tax rates will be higher in 30+ years, though, all they've seem to do is go down in the past 30. Right?

If "they" do it, my guess is it will be through some type of means testing. At one time SS benefits weren't taxed at all, and SS taxes are "after-tax" dollars just like a Roth. IIRC, at first only a max of 50% of SS benefits were taxed, then in 1993 it was raised to 85%. I suspect we will see it raised to 100% in the fairly near future as part of a SS "fix". I don't mean to discourage you from a Roth. If I could, I would contribute to a Roth after I maxed out my tax-deductible contributions. But I am hesitant to rollover my existing IRA's to Roth's and pay the tax up front (I think we can do that in 2010).

 

[MasterBlaster]

If I recall correctly until 1997 there was a 15% IRA "excess distribution" penalty in the tax code for large withdrawals. I don't remember the details - perhaps Martha would know.

So there is indeed precident for IRA means testing.

 

[Cut-Throat]

Confiscatory Socialists by any name are a true threat to those who responsibly saved and through personal effort have more than the 'less fortunate'. They gain power by reallocating the wealth of others to those who become their supporting political force. There is a real longer term asset preservation issue here IMHO. Besides inflation which is insidiously built into the system and functions as a surrogate asset seizure over time, the feds can and have found ways to take retirement assets, from double taxation to stealing it from your kids through the estate tax.

You are not paranoid if it turns out to be true that they really are out to get you! Perhaps this is a good reason to hedge your in-country assets and keep assets in more than one political system. Maybe buy a flat in Lucern or Zug and get to know your local banker.

You guys should be blaming the current administration (GW 'Chimp' Bush) for the economic debt that we are racking up. They are the ones spending it! - Not future administrations that will have to Fix it.

 

[LEX]

I follow my own advice. I typically have done well by it.

Having international hedging means it takes several "confiscatory" political systems to evaporate all my assets. Typically this is low probability/high impact risk. Political risk mitigation is similar to Tax planning and is valid issue in asset preservation. I would suggest there is more, not less incentive for those IRA's to become subject to either indirect taxation or subesquent seizure in the next ten years. I am also mindfull this is not an issue that most need to concern themselves with as most domestic wealth is gone within one generation anyway. Do your own due dilligence.

 

[CCdaCE]

I agree, C-T, but "I didn't vote for 'em" and I don't feel there's much I can do about "monkey boy" ...and... I feel, we're gonna be "takin' fire", I just wanna know which to "aim the Claymore".

I know what I'm going to do (just like LEX said), just wondering what others' take is on the situation.

"Don't get me started" *wink*

Preach on LEX. It's those low probabilities multiplied by the high impact that wipe things out. I'm not at the point where I feel I need, or that it would be efficient, to have multitudes of investment vehicles in a wide array of currencies. ... but, I see your point. Heck, it's just a lousy $4K in a Roth. Seems like it's starting to add up, though.

-CC

 

[Bikerdude]

You guys should be blaming the current administration (GW 'Chimp' Bush) for the economic debt that we are racking up. They are the ones spending it! - Not future administrations that will have to Fix it.

Yeah, reminds me of LB 'Ears' Johnson with the "Great Society" and Vietnam. Still reeling (no pun intended) from that one.

 

[brewer12345]

... So, my question is... how are "they" gonna go about bleeding off any available funds from within Roth IRAs. I dutifully stick money in that honey pot, thinkin' it's virtually guaranteed that tax rates will be higher in 30+ years, though, all they've seem to do is go down in the past 30. Right?

-CC

How about a national 15% sales tax?

 

[CCdaCE]

How about a national 15% sales tax?

Ding. ding. ding. We have a winner.

That'd be sweet, actually. Punish all the hoarding/consuming Americans.

Everyone'd argue it'd hurt/target the poor, though. I'm guessing it wouldn't pass, although I haven't heard or read much about the issue in the last six months.

-CC

 

[FIRE'd@51]

There's not a "snowball's chance in hell" of it even getting out of the Ways and Means Committee so long as the Democrats control Congress, unless it were in addition to the income tax. I'd give it a lower probability of passing than a flat tax.

 

[Cut-Throat]

Ding. ding. ding. We have a winner.

That'd be sweet, actually. Punish all the hoarding/consuming Americans.

Everyone'd argue it'd hurt/target the poor, though. I'm guessing it wouldn't pass, although I haven't heard or read much about the issue in the last six months.

-CC

Why would you want this? You've saved your money and paid taxes on the income. Now you want to pay taxes again when you spend it?

I would like to see a Federal $5 a gallon gas tax though. That would start a conservation movement like you've never seen. Get the SUVs off the highways too. Good for the planet and we'd have plenty of gas for years to come!

 

[FIRE'd@51]

Why would you want this? You've saved your money and paid taxes on the income. Now you want to pay taxes again when you spend it?

C-T, you bring up a very good point - it's something I have been thinking about since this whole issue of replacing the income tax with a national sales tax has come up. How do they do it in a way that is fair to the retired folks who have amassed a substantial amount of after-tax dollars? Those folks already paid high income taxes on their wages, and many, if not most, want (or may have to) consume a large portion of those dollars before they die. In addition, to raise the same amount of money to finance the government's current budget the tax would have to apply to everything - houses, health care, etc.

 

[Dawg52]

I would like to see a Federal $5 a gallon gas tax though.

I just spit my coffee all over the computer screen. Where are the paper towels?