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08-04-2011, 11:55 AM
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#141
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,891
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Quote:
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?
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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?
Quote:
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.
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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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08-04-2011, 11:55 AM
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#142
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Posts: 12,880
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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:
http://www.early-retirement.org/foru...ime-42647.html
And this is what the market has done since that day:
chart.jpg
__________________
Al
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08-04-2011, 11:56 AM
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#143
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Full time employment: Posting here.
Join Date: May 2011
Location: Marco island
Posts: 815
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Quote:
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.
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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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08-04-2011, 12:05 PM
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#144
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
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Quote:
Originally Posted by REWahoo
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.
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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.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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08-04-2011, 12:06 PM
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#145
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gone traveling
Join Date: May 2011
Location: Portland
Posts: 133
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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?
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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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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08-04-2011, 12:08 PM
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#146
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Moderator Emeritus
Join Date: May 2007
Posts: 12,901
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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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08-04-2011, 12:16 PM
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#147
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
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Quote:
Originally Posted by W2R
I am old enough that claiming SS is always a possibility by now, ...
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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.
__________________
Numbers is hard
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08-04-2011, 12:17 PM
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#148
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
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Quote:
Originally Posted by REWahoo
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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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.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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08-04-2011, 12:28 PM
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#149
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Recycles dryer sheets
Join Date: Jan 2011
Location: Marietta
Posts: 117
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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.
__________________
Give me a surfboard and a hammock, some fresh fruit and veg, a fish or two and I am happy for life. I don't need much of a roof over my head to be happy.
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08-04-2011, 12:45 PM
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#150
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2006
Location: Collin County, TX
Posts: 9,296
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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.
__________________
There's no need to complicate, our time is short..
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08-04-2011, 01:13 PM
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#151
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
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Quote:
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.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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08-04-2011, 01:14 PM
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#152
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gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
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Quote:
+1.
I'm adding a bit of Kaluha to mine ...
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08-04-2011, 01:16 PM
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#153
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Recycles dryer sheets
Join Date: May 2006
Posts: 465
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Quote:
I think this calls for something stronger like an Irish coffee.
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08-04-2011, 01:19 PM
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#154
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2007
Posts: 5,072
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Quote:
Originally Posted by Gatordoc50
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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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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08-04-2011, 01:23 PM
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#155
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,891
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Quote:
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? ...
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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?
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Quote:
Originally Posted by DoraM
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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Where is that word 'guaranteed'? That's what I questioned on your post.
-ERD50
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08-04-2011, 01:31 PM
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#156
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Recycles dryer sheets
Join Date: Jun 2007
Posts: 413
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Quote:
Originally Posted by W2R
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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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.
__________________
Retired - Class of 2011
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08-04-2011, 01:32 PM
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#157
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,714
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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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08-04-2011, 01:38 PM
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#158
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Full time employment: Posting here.
Join Date: May 2011
Location: Marco island
Posts: 815
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Quote:
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.
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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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08-04-2011, 01:38 PM
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#159
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: Independence
Posts: 7,298
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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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08-04-2011, 01:43 PM
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#160
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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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?
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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.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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