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Congressional pensions & Boomer savings rates
Old 08-31-2004, 11:13 PM   #1
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Congressional pensions & Boomer savings rates

(Shamelessly plagiarized from FundAlarm.com.)

Bud Hebeler riffs on Congress' pension benefits-- while the Congressional Budget Office manipulates savings data to make Boomer's portfolios look good enough to retire on. th, you'd be proud of their "distortion methodology".

http://www.analyzenow.com/Free%20Pubs/government.htm

And I wonder when Bud started drawing his Social Security!
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Re: Congressional pensions & Boomer savings rates
Old 09-01-2004, 11:22 AM   #2
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Re: Congressional pensions & Boomer savings rates

Lots of goodies in here.

"This report concludes that the baby boomers are going to be much better off when retired than the previous generation. That’s in spite of the fact that the baby boomers have been saving less, have record debts, smaller numbers will get pensions, medical costs are increasing exponentially, retirement funds have to be stretched over longer life-expectancies, and tax rates are likely to increase to support the massive build up of federal debt as well as the large increase in the ratio of retired people to the working population."

I've seen that disconnect in a lot of reports. The situation regarding current workers retirement outlook are wonderful despite all real world indicators showing the exact opposite. We're probably looking at an entire generation of poverty stricken retirees. I suppose the "good" news is that nobody will be able to afford anything, resulting in dropping prices. Of course, that creates deflation. Good luck with those TIPS if that happens!

"How is the government able to distort information so? First, the government appoints those who are known to support the desired conclusions. Then, if any part of the committee’s findings is not compatible with the desired answer, any opposing data is rejected and/or distorted. I’ve watched this happen many times in committees to which I’ve been appointed for the Departments of Interior, Commerce, Energy, and Defense, as well as the Congress itself. I’ve seen reports unsigned and abandoned because the committee would not support the government’s desired political objective."

Yep, thats the formula. Of course, you need a variety of "whores" to make sure nobody reviewing this stuff realizes that its the same outfit or couple of outfits that keep churning out the "good" answers and results .

"The fact is that most of the inputs are judgmental, because there is no direct measurement of savings."

My favorite! You get to make stuff up! And as long as nobody calls you on it or investigates your sources, you're good to go!

The report later goes on to describe our "savings" as including "property" without describing what "property" means. It appears to include cars, boats, furniture and so forth. Which supports a thesis that fast spending, high debt people might be worth more than they are. It also includes this "property" as part of the wealth that increases in value yearly. Sorry, but except for a home, most assets depreciate, not appreciate.

Also not included in the study is any discussion of risks. We all like to talk about taking on debts but we dont like to talk about risks. Someone with a large debt, especially on a variable rate interest rate, is taking on some risk. Except we shouldnt worry about it because its never been a problem before. Except historically that debt risk HAS been a major problem over and over. And this debt load crop is higher than its ever been historically. So the good news is our collective debt is included in this analysis, but none of the associated risk. Its all gonna be ok! Dont worry! Be happy! Keep spending until we reach our term limits!!!

The biggest faux pas is comparing a pre-retirement financial scenario including taxes with a post retirement scenario that doesnt include tax implications. Hey! We found a way to create a 20-25% advantage with a wave of the magic wand!!!

I cant even read any more of this...

The bottom line is that the average person in the US will have roughly 10% of the investment savings they'll need to achieve 80% of their pre-retirement annual income. Unless my morning pre-coffee math is faulty (an extremely good possibility) that means they'll be able to see about 8% of their pre-retirement income. For the average person thats about 5-6k a year tops. Add in 70% of the average social security benefit (a pretty reasonable guess I think) of about 8-9k a year. Wow, living on 12-15k a year! Thats frugal!!!

The real problem is that at the end of the day, 75-80% of people in this country arent that bright, are highly gullible, and look at a pie or bar chart with a few words below it and swallow that "data" hook line and sinker. Coupled with peoples need to think short term and see immediate gratification. All you need are a few smart people to craft the charts, hook a finger, insert it into the publics nose, and lead away...
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Re: Congressional pensions & Boomer savings rates
Old 09-01-2004, 03:39 PM   #3
 
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Re: Congressional pensions & Boomer savings rates



Re. "75-80 % of the people in this country aren't that bright": Man, you are not even close. Even allowing for
my galloping egomania, and the fact that my ex. told me that I thought I was smarter than everyone else
(true). I would say the "not that bright" label
can be stuck on about 99% of the population. But that's just me. It's the cross I have to bear.

John Galt
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Re: Congressional pensions & Boomer savings rates
Old 09-01-2004, 05:08 PM   #4
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Re: Congressional pensions & Boomer savings rates

Well

I hope a reasonable portion of the non bright people are DCA'ing into low expense diversified index funds.

Given the choice between bright and grit - I'll take grit any day of the week, my 'bright' moves having come up a tad short in the stretch.

Given the low interest/high stock valuations - I pontificate that grit will be meaningfully tested in the coming years.
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Re: Congressional pensions & Boomer savings rates
Old 09-01-2004, 05:20 PM   #5
 
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Re: Congressional pensions & Boomer savings rates

Quote:
Given the low interest/high stock valuations - I pontificate that grit will be meaningfully tested in the coming years.

Hey, I know what you mean here. But if the market ever starts dropping, remember this; the further it drops the less risk there is left staying in it. So it only gets better!
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Re: Congressional pensions & Boomer savings rates
Old 09-01-2004, 06:01 PM   #6
 
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Re: Congressional pensions & Boomer savings rates

Sorry Cut_Throat, but re. "it only gets better"
(as the market drops), I couldn't help but think about
"They can only kill you once", Or, as Shakespeare
put it: 'By my troth, I care not;
a man can die but once: we owe God a death and let it go which way it will, he that dies this year is quit
for the next.'

John Galt
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Re: Congressional pensions & Boomer savings rates
Old 09-01-2004, 07:37 PM   #7
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Re: Congressional pensions & Boomer savings rates

True they can only kill ya once, but they can poke tiny little holes in you for a very, very, very long time.
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