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More SS undermining
Old 11-01-2010, 01:00 PM   #1
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More SS undermining

Here is more subtle undermining SS as part of retirement planning.

the-new-retirement-realities-for-generations-x-and-y: Personal Finance News from Yahoo! Finance

One critical statement is

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So Lynn Mayabb, senior managing advisor with BKD Wealth Advisors, in Kansas City, Mo., doesn't even count Social Security when helping to plan retirement for her clients who were born in or after 1970. And to cover the 25% to 35% of retirement income that Social Security provides for retirees today, she says, we'll need to increase our savings by 10% to 12%.
Those increased savings will, of course, increase her fees. Why doesn't she encourage her clients to lobby their senator and house rep to promote and protect their SS benefits.
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Old 11-01-2010, 01:12 PM   #2
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I believe that a lessor SS projection is prudent and realistic.

In spite of the fact that more savings increases advisor fees.

To do otherwise is to a clients detriment.

To anybody that's been watching, we have seen this coming for decades.

For those that just want to do the tax solution ... I would ask, What underfunded programs do you want to tax for ? Shall we just fund SS and stiff Medicare, states, huge deficits? Somewhere along the way those high taxes will bring the economy to a standstill and be counter-productive.

If you think about it, you just might conclude that we can't fund everything and that cuts are inevitable. This is a hard problem and there are no snap your fingers solutions.
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Old 11-01-2010, 01:26 PM   #3
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Those increased savings will, of course, increase her fees. Why doesn't she encourage her clients to lobby their senator and house rep to promote and protect their SS benefits.
of course, nothing is guaranteed. i would rather save an extra 10-12% than be at the mercy of congress and the impeccable efficiency of the gummit. congress people get letters, nothing happens, meanwhile i save extra and continue with my plan. SS is a huge uncertainty for me, and very difficult for me to have an impact. that's why it's better to save extra and count SS as lagniappe, if lagniappe will be allowed when i take the dive.
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Old 11-01-2010, 01:34 PM   #4
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Why doesn't she encourage her clients to lobby their senator and house rep to promote and protect their SS benefits.
Because that hasn't worked in 40+ years??
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Old 11-01-2010, 01:42 PM   #5
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Why doesn't she encourage her clients to lobby their senator and house rep to promote and protect their SS benefits.
Because she's a financial advisor and not a political advisor?

Because a client who was born before 1970 is still likely working, and if congress did as you suggest she'd just have to subtract the increased SS taxes the client would pay thus leaving an even bigger gap?
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Old 11-01-2010, 01:47 PM   #6
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Why doesn't she encourage her clients to lobby their senator and house rep to promote and protect their SS benefits.
Because one approach (personal savings) has a fairly certain outcome. Writing your govt reps is very uncertain (I know, I've done it many times!).

If I turn around what you wrote, you are saying we should give up on personal responsibility and increase our reliance on the govt to "take care of us". IMO, that is part of what has us in the mess we are in. I am doing what I can to plan for my own future, and I encourage others to do the same. Especially young people.

Seriously - what is your advice to a twenty something starting out in their career? Would you tell them:

A) Aggressively save and plan for your own future.

B) Ask your Congressional representatives to please, pretty please take care of you?

It's not a rhetoric question - it is the logical output of what you posted.

-ERD50
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Old 11-01-2010, 02:12 PM   #7
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Because one approach (personal savings) has a fairly certain outcome. Writing your govt reps is very uncertain (I know, I've done it many times!).

If I turn around what you wrote, you are saying we should give up on personal responsibility and increase our reliance on the govt to "take care of us". IMO, that is part of what has us in the mess we are in. I am doing what I can to plan for my own future, and I encourage others to do the same. Especially young people.

Seriously - what is your advice to a twenty something starting out in their career? Would you tell them:

A) Aggressively save and plan for your own future.

B) Ask your Congressional representatives to please, pretty please take care of you?

It's not a rhetoric question - it is the logical output of what you posted.

-ERD50
I agree with the need for personal responsibility and frugality of a core ER strategy. I'm just pointing out the dogma that keeps being repeated that seeks to eliminate SS from retirement planning.

For people with the finances to save enough for retirement on their own this is ok. I assume that BKD Wealth Advisors' client base doesn't include many people earning minimum wage who rely on the solvency and availability of SS. Also with the obvious lack of retirement saving in the US and the decimation (almost literally) of 401ks, it seems sensible to promote a guaranteed social insurance program.
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Old 11-01-2010, 02:14 PM   #8
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A) Aggressively save and plan for your own future.

B) Ask your Congressional representatives to please, pretty please take care of you?

It's not a rhetoric question - it is the logical output of what you posted.

-ERD50
Do both, but I wouldn't use "pretty please" in B) I'd point out the necessity of a social insurance program
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Old 11-01-2010, 02:27 PM   #9
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Do both,
So what's your beef with the article? You can write your reps, but since you can't count on the outcome, you must also increase your personal savings. It doesn't do to increase savings by only half as much if we think there is a 50% probability of getting SS or not. We gotta do what we gotta do.

Seems like good advice to me. You seem to equate increasing savings as "giving up" on SS. I think it just taking reasonable precautions.


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Also with the obvious lack of retirement saving in the US and the decimation (almost literally) of 401ks, it seems sensible to promote a guaranteed social insurance program.
So we differ here. I think the sensible thing to do is to educate people on personal responsibility, and encourage rather than discourage it. I have had this talk with my children who are on their own.

I don't get my house or car or umbrella insurance from the govt. And I self-insure for many things. Why do I want "retirement insurance" from the govt?

-ERD50
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Old 11-01-2010, 02:29 PM   #10
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1970 huh? Well I guess I'm a fossil since I was born in 1957. Even though I am a fossil, I use only 50% of our 'promised' SS in my projections.
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Old 11-01-2010, 02:52 PM   #11
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1970 huh? Well I guess I'm a fossil since I was born in 1957. Even though I am a fossil, I use only 50% of our 'promised' SS in my projections.
In that case I must be a fossilized fossil.

By coincidence, DD brought up the subject while we were visiting this past weekend. She said that she wasn't counting future SS in her financial planning, and I told her that was a good plan. She and her husband are both approaching 30.

When you are 20 - 30 years out, I can see no harm in planning to not have it, even though I believe it will still be there in one form or another.
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Old 11-01-2010, 02:54 PM   #12
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1970 huh? Well I guess I'm a fossil since I was born in 1957. Even though I am a fossil, I use only 50% of our 'promised' SS in my projections.
Tax brackets aside, one could certainly make a case that 50% should be considered taxable income for everyone since they didn't pay taxes on half the contributions (employer portion).

I think there is a fair chance that something like a hybrid between the Ryan proposal and increasing means testing will get finally passed. Hard to call until after 2012.
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Old 11-01-2010, 03:08 PM   #13
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Originally Posted by MasterBlaster View Post
To anybody that's been watching, we have seen this coming for decades.

For those that just want to do the tax solution ... I would ask, What underfunded programs do you want to tax for ? Shall we just fund SS and stiff Medicare, states, huge deficits? Somewhere along the way those high taxes will bring the economy to a standstill and be counter-productive.

If you think about it, you just might conclude that we can't fund everything and that cuts are inevitable. This is a hard problem and there are no snap your fingers solutions.
Social Security isn't underfunded. It's been running up a surplus for decades.
Why are we spending double what others spend on healthcare?
Why are we spending trillions to keep the oil companies in business?
Why are we spending trillions on submarines and aircraft carriers when our enemy's can weaponize a laser printer?
And what's the likelyhood that we'll be voting in another tax cut tomorrow?
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Old 11-01-2010, 03:09 PM   #14
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I think there is a fair chance that something like a hybrid between the Ryan proposal and increasing means testing will get finally passed. Hard to call until after 2012.
Even the UK is considering doing away with means testing for their equivalent to SS. They reckon that if they do away with means testing that they can actually raise the amount that everyone gets since means testing costs so much.

I think the basic UK state pension is treated as just another income stream so will be taxed at the recipient's tax level.

State pensions: ministers plan to pay 140 a week and end means testing | Politics | The Guardian

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Ministers believe that removing means testing and the resulting reduction in bureaucracy will save around 6bn a year. They believe a single-tier system would also reduce reliance on benefits.
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Old 11-01-2010, 03:13 PM   #15
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Social Security isn't underfunded. It's been running up a surplus for decades. ?
That's true. And they spent those surpluses like drunken sailors. It's all gone now - surprise !

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Why are we spending double what others spend on healthcare?
Good question. The snap your fingers answer though is really hard.

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Why are we spending trillions to keep the oil companies in business?
we aren't. You are off by orders of magnitude.

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Why are we spending trillions on submarines and aircraft carriers when our enemy's can weaponize a laser printer?
When the Commies come, I let them know to get you first

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And what's the likelyhood that we'll be voting in another tax cut tomorrow
tax cuts are unlikely. fiscal sanity is more likely
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Old 11-01-2010, 03:22 PM   #16
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we aren't. You are off by orders of magnitude.
How much has it cost us to maintain the fifth fleet?
How much did it cost to prosecute the war in Iraq?

Has it all been to support the sardine industry?
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Old 11-01-2010, 03:25 PM   #17
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Even the UK is considering doing away with means testing for their equivalent to SS. They reckon that if they do away with means testing that they can actually raise the amount that everyone gets since means testing costs so much.

I think the basic UK state pension is treated as just another income stream so will be taxed at the recipient's tax level.

State pensions: ministers plan to pay 140 a week and end means testing | Politics | The Guardian
We are a little behind here. We can't even take care of sick people. I still think we will have to learn the lesson you describe the hard way.
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Old 11-01-2010, 03:27 PM   #18
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Even the UK is considering doing away with means testing for their equivalent to SS. They reckon that if they do away with means testing that they can actually raise the amount that everyone gets since means testing costs so much.
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I think the basic UK state pension is treated as just another income stream so will be taxed at the recipient's tax level.

State pensions: ministers plan to pay 140 a week and end means testing | Politics | The Guardian
Seems like a good idea. However, the UK does not seem to be currently engaged in class war, which we are. I expect that before long any American who is solvent may have "R" tattooed on his/her forehead.

Ha
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Old 11-01-2010, 03:31 PM   #19
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Seems like a good idea. However, the UK does not seem to be currently engaged in class war, which we are. I expect that before long anyone who is solvent may have "R" tattooed on his/her forehead.

Ha

You mean when someone characterizes social security as welfare or government employees as lazy lumps on a log...or union workers as greedy and shiftless...?
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Old 11-01-2010, 03:33 PM   #20
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Ministers believe that removing means testing and the resulting reduction in bureaucracy will save around 6bn a year.
A reduction in bureaucracy? Heh heh, how different the British are from us Americans...
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