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Old 08-04-2011, 12:55 PM   #141
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I am kind of worried about all of the pension funds if we get S&P500 in the 700 range again. Aren't most of them heavily invested in the stock market so they can get those guaranteed 8% returns they told the employees?
I don't recall any 'guarantee' of 8% returns in my pension fund. Can you quote that language from your pension fund?

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So even iif I manage to save a good portion of our 401K by market timing, I may end up losing it to taxes when the pensions need bailing out. A lose-lose situation...I am not happy.
And if you end up losing a good portion by market timing (you need to call both the in and out points reasonably well), you'll be really unhappy.

Good luck!

-ERD50
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Old 08-04-2011, 12:55 PM   #142
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The last time it felt to me like it really was "different this time" was in 2009. Here is a thread I started on 2/21/2009:

Why it Is or Isn't Different This Time

And this is what the market has done since that day:

chart.jpg
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Old 08-04-2011, 12:56 PM   #143
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Originally Posted by DoraM

I am kind of worried about all of the pension funds if we get S&P500 in the 700 range again. Aren't most of them heavily invested in the stock market so they can get those guaranteed 8% returns they told the employees?

So even iif I manage to save a good portion of our 401K by market timing, I may end up losing it to taxes when the pensions need bailing out. A lose-lose situation...I am not happy.
We are getting a lesson in the mechanics of the free enterprise system. Defined benefit pension plans and guarantees have no place in it. Our leaders can baffle the American people, but they can't fool free market capitalism. It's a perfect economic system but not a compassionate one. It just doesn't care what people think they deserve.
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Old 08-04-2011, 01:05 PM   #144
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Someone needs to start (and manage) a 'guess the bottom' thread...

Me, I don't know where or when we'll hit bottom and don't plan on worrying about it too much - at least not like the last time. My allocation (38% stocks) and cash bucket is much better positioned for a deep and protracted period of 'market unpleasantness' than in 2008. As long as SS checks keep coming and Wellesley keeps paying dividends, I'm good for several years.
Ah, but what if runaway inflation occurs? There is ALWAYS something to worry about. Quick, run out and stock up on guns, ammo, and gold, and take to the woods.

I'll be fine too. Like you, I am much better positioned for another crash - - although my AA is about the same, I am old enough that claiming SS is always a possibility by now, and I have my teeny-weenie pension now, too. But more than any of that, I know that I have been though the 2008-2009 crash and survived it and my portfolio recovered. That knowledge is a tremendous asset.
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Old 08-04-2011, 01:06 PM   #145
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Originally Posted by ERD50 View Post
I don't recall any 'guarantee' of 8% returns in my pension fund. Can you quote that language from your pension fund?



And if you end up losing a good portion by market timing (you need to call both the in and out points reasonably well), you'll be really unhappy.

Good luck!

-ERD50
From:

The Public Pension Crisis - NYTimes.com

"Pension funds subsist on three revenue streams: contributions from employees; contributions from the employer; and investment earnings. But public employers have often contributed less than the actuarially determined share, in effect borrowing against retirement plans to avoid having to cut budgets or raise taxes.
They also assumed, conveniently enough, that they could count on high annual returns, typically 8 percent, on their investments. In the past, many funds did earn that much, but not lately. Thanks to high assumed returns, governments projected that they could afford to both ratchet up benefits and minimize contributions. What a lovely political algorithm: payoffs to powerful, unionized constituents at minimal cost."
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Old 08-04-2011, 01:08 PM   #146
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Stimulus? Bail outs? The folks in Washington say we are flat broke and that we need to cut spending.

Even the Swiss with their trading surpluses, low inflation, low unemployment and healthy public finances worry that the next few years are gonna be really bad. And that's what the politicians tell the public!
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Old 08-04-2011, 01:16 PM   #147
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I am old enough that claiming SS is always a possibility by now, ...
I found that to be a very welcome 'safety net' back in 2008 when, the same month the market hit bottom, I applied to begin taking SS benefits. Can't help wondering how many folks who have been delaying will decide 'I've waited long enough' should if as the market continue its decline.
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Old 08-04-2011, 01:17 PM   #148
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I found that to be a very welcome 'safety net' back in 2008 when, the same month the market hit bottom, I applied to begin taking SS benefits. Can't help wondering how many folks who have been delaying will decide 'I've waited long enough' should if as the market continue its decline.
I might be one of them! I always have that option, now that I am old enough for it, and I am glad about that.

Wow, down 370 points by now. Breathtaking. This reminds me of 2008, so much.
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Old 08-04-2011, 01:28 PM   #149
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So much for market timing. Dow off 360 ish points. I am so glad I only put half my bonus in on Monday. Just changed the other half of my bonus to start going in daily for the next 10 days. Should be a wild ride. But we have seen this all before, today is nothing different.
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Old 08-04-2011, 01:45 PM   #150
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Ahhhhh geezzzzzz....it's freak out time on the forum again.

Think I'm gonna make mahsef a frosty coffee drink...with a little whipped cream and chocolate sprinkles.
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Old 08-04-2011, 02:13 PM   #151
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Ahhhhh geezzzzzz....it's freak out time on the forum again.

Think I'm gonna make mahsef a frosty coffee drink...with a little whipped cream and chocolate sprinkles.
Sounds good! Maybe I'll try making one of those too (or a diet version if I can figure one out). And pass the (virtual) popcorn, thanks.
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Old 08-04-2011, 02:14 PM   #152
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Ahhhhh geezzzzzz....it's freak out time on the forum again.

Think I'm gonna make mahsef a frosty coffee drink...with a little whipped cream and chocolate sprinkles.
+1.

I'm adding a bit of Kaluha to mine ...
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Old 08-04-2011, 02:16 PM   #153
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Ahhhhh geezzzzzz....it's freak out time on the forum again.

Think I'm gonna make mahsef a frosty coffee drink...with a little whipped cream and chocolate sprinkles.
I think this calls for something stronger like an Irish coffee.
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Old 08-04-2011, 02:19 PM   #154
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Originally Posted by Gatordoc50 View Post
We are getting a lesson in the mechanics of the free enterprise system. Defined benefit pension plans and guarantees have no place in it. Our leaders can baffle the American people, but they can't fool free market capitalism. It's a perfect economic system but not a compassionate one. It just doesn't care what people think they deserve.


Not quite. DB plans work if managed properly (e.g., risk) and funded properly.


Besides... the pension problem is not just the govt... but a number of companies.

Numerous examples of it working.
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Old 08-04-2011, 02:23 PM   #155
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I am kind of worried about all of the pension funds if we get S&P500 in the 700 range again. Aren't most of them heavily invested in the stock market so they can get those guaranteed 8% returns they told the employees? ...

Quote:
Originally Posted by ERD50
I don't recall any 'guarantee' of 8% returns in my pension fund. Can you quote that language from your pension fund?
Quote:
Originally Posted by DoraM View Post
From:

The Public Pension Crisis - NYTimes.com

"Pension funds subsist on three revenue streams: contributions from employees; contributions from the employer; and investment earnings. But public employers have often contributed less than the actuarially determined share, in effect borrowing against retirement plans to avoid having to cut budgets or raise taxes.
They also assumed, conveniently enough, that they could count on high annual returns, typically 8 percent, on their investments. In the past, many funds did earn that much, but not lately. Thanks to high assumed returns, governments projected that they could afford to both ratchet up benefits and minimize contributions. What a lovely political algorithm: payoffs to powerful, unionized constituents at minimal cost."
Where is that word 'guaranteed'? That's what I questioned on your post.

-ERD50
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Old 08-04-2011, 02:31 PM   #156
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I might be one of them! I always have that option, now that I am old enough for it, and I am glad about that.

Wow, down 370 points by now. Breathtaking. This reminds me of 2008, so much.
Really hate this.

I'll personally survive, I think. I moved my IRA to FDIC insured (will that matter?) accounts last Monday. So there has been no change (.01% APY) for a week. Normally, I'd see an average increase of $500 weekly with my conservative stock/bond funds.

The people who will be hurt worse will be the most needy.
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Old 08-04-2011, 02:32 PM   #157
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The S&P doubled in 2 years and now is off about 5% YTD and 8% from it's recent high - give or take a bit. This is a hiccup. Folks need to stop watching CNBC and get back to enjoying life.

edit to add: at current prices and based on GMO or Shiller PE type valuations, US "blue chip" equities are now priced to be much better investments compared with fixed income. just sayin'...
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Old 08-04-2011, 02:38 PM   #158
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Originally Posted by chinaco



Not quite. DB plans work if managed properly (e.g., risk) and funded properly.

Besides... the pension problem is not just the govt... but a number of companies.

Numerous examples of it working.
I'm not aware of any entity, public or private where it is working. Please give some examples, I'd like to research them and find out how they have been able to sustain success.
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Old 08-04-2011, 02:38 PM   #159
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Psst - just got off the phone ordering up surrender forms on our life insurance policies. Have had them, cross insured, for over 21 years. At this point, the amount they would pay at death is relatively trivial and will only become more so over the next 20 years. Our cash surrender value is roughly a 1/4 of the combined death benefit for both policies, and given that only one of us would benefit from a death and we could end up paying 1/2 the value of the policies in premiums over the next 20 years, what the heck - we'll take the cash now. Good to look around and make money when the market is crashing.
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Old 08-04-2011, 02:43 PM   #160
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I don't recall any 'guarantee' of 8% returns in my pension fund. Can you quote that language from your pension fund?
Funds generally don't "guarantee" a certain rate of return to pensioners. What some of them do is set benefit levels based on assumptions about future returns on pension fund investments. And really, I think anything that projects returns north of 7% is likely "overpromising" and setting itself up for a crisis -- both to pensioners and, in the case of public sector pensions, the taxpayers.
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