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Re: PBS Frontline - Can You Afford to Retire?
Old 05-16-2006, 10:09 PM   #21
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Re: PBS Frontline - Can You Afford to Retire?

Quote:
Originally Posted by youbet
Justin,

So how do you take the variable withdrawal rates to your budget?* What happens in the low withdrawal years?
Youbet, here are some of my thoughts on the "real-life" budget impact of variable withdrawal rates (lifted from a piece I wrote for my wife a while ago):

"So far I've talked about a consistent, year after year "fixed" rate of withdrawal for our retirement income (the only exception being that each year we'd increase our withdrawal by the rate of inflation for the year past). So even in the event of severe market downturns we'd still withdraw the same amount as the year before, plus a bit more to account for inflation.* Similarly, even after a strong multi-year run-up in our net worth, we'd just take the same amount as the year prior, with only the minor inflation adjustment.

On the other hand, if we were to show a bit of flexibility in our year-to-year withdrawals based on prior-year market performance, adjusting our draw somewhat based on year-end portfolio value, we could either:

- draw a somewhat larger amount right from the outset,

or (my strong preference)

- take the same ~4% initial draw, but with a larger margin of safety.

We probably wouldn’t be happy if we allowed our annual draws to track our year-end portfolio value exactly – even if we started out with a 20% higher withdrawal rate, chopping our spending by 20% from one year to the next, or increasing it by 30% from one year to the next (both of which would likely happen 2 - 6 times in the next 55 years) is more variation than we’d like. The 20% down years would be more uncomfortable than we’d like, and spending 30% more in a given year would likely be somewhat wasteful. I think it’d be preferable to allow our annual draw to float only slightly, back and forth about $3000 or $4000 during those more extreme once-every-ten-year market swings.

Our budget is about 50% fixed annual expenses - those that are not optional and really don’t vary, such as property taxes, groceries, health & other insurances, etc. The other 50% are discretionary expenses that are more variable in nature…walking around money, remodeling, dining out, music stuff, vacations, etc.* So on the surface it looks as though whatever differences we’d see in our annual expenditures would have to come out of the discretionary accounts alone. But there’s actually a bit more to it than that…

The good news is that I believe the $3000 - $4000 dollar swings mentioned above would be relatively painless, because many of our discretionary expense items are “long-cycle”…things such as car and motorcycle purchases, home remodeling/major repairs, and Hawaiian vacations.* We won’t incur those expenses every single year. If we simply made an effort to make those expenditures (whenever possible) following good years, we probably wouldn’t have to shave our entertainment, gift, dining out, or golf budgets much during bad years. A business tries to do the same thing…when profits are squeezed they tend to defer major capital equipment expenditures, but they still pay their taxes, etc."
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 08:58 AM   #22
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Re: PBS Frontline - Can You Afford to Retire?

Quote:
Originally Posted by youbet
So how do you take the variable withdrawal rates to your budget? What happens in the low withdrawal years?
Let's say I retire with $1,000,000 and I plan on taking $40,000/yr fixed (w/ inflation adjustments). That's the default w/ the 4% SWR.

Instead, I might take 3% fixed ($30,000/yr) plus 2% variable (initially $20,000/yr). This would give me either a higher standard of living initially, or allow me to ER a little sooner. I would be taking $50,000/yr initially. If the portfolio takes a massive 50% drop, to $500,000, I'm still drawing $40,000/yr (plus a CPI COLA on 75% of that amount) under this 3%/2% hybrid plan.

For a 2% fixed/4% variable plan, I'd draw $60k initially. W/ a 50% drop in portfolio value, I'd still draw $40,000/yr (plus a CPI COLA on 50% of that amount).

Those are pretty awful scenarios to encounter shortly after retirement. I've got a lot of discretionary spending built into my ER budget for travel and other things (~30% of the budget). I can cut back in lean years and live large(r) in good years. Capital improvements or purchases can be made in good years (new roof, house, car, etc.).

I also have the opportunity for spouse and I to work a few hrs/wk and make enough money to support 30-40% of our nondiscretionary budget items.

Then there's the conservatism built into the budget itself. Some of the expenses can be reduced when I have time to focus on them instead of working.
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 09:56 AM   #23
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Re: PBS Frontline - Can You Afford to Retire?

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Originally Posted by justin
For a 2% fixed/4% variable plan, I'd draw $60k initially.* W/ a 50% drop in portfolio value, I'd still draw $40,000/yr (plus a CPI COLA on 50% of that amount).
I'm really having trouble understanding.* Sorry.

If your portfolio drops to $500K and you withdraw $40K, doesn't that mean your withdrawal percentage of your portfolio for that year is a whopping 8%?* ** How does taking 8% help overcome the massive loss in portfolio value?

The Retire Early Homepage site has an excellent article on withdrawal rates in hard times.* Take a look at it.

Also, for folks still a number of years away from retirement, you may be underestimating the importance of having funds for discretionary spending.* I'm only a few weeks from beginning non-work life.* My budget includes a descretionary category for travel, entertainment, toys, etc.* I can tell you with candor that as I stand on the brink of retirement, removing this discretionary spending from my budget to accomodate a lower SWR would be a very, very unhappy thing!* * * In fact, if I thought that was the situation, I would stay at work a little longer.*

Therefore, I chose to go with the more conservative 4% SWR that I feel I can stay with even in hard times.* That meant working longer than I really wanted to, but I felt I needed to accomodate my own desires.* So, consider the fact that as you near retirement age, the thought of giving up descretionary spending and hunkering down under a very tight budget will likely become more distasteful.




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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 10:32 AM   #24
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Re: PBS Frontline - Can You Afford to Retire?

Quote:
Originally Posted by youbet
I'm really having trouble understanding. Sorry.

If your portfolio drops to $500K and you withdraw $40K, doesn't that mean your withdrawal percentage of your portfolio for that year is a whopping 8%? How does taking 8% help overcome the massive loss in portfolio value?
The 3% fixed/2% variable withdrawal strategy I'm talking about works like this:

The "fixed" component of withdrawal works just like a regular fixed SWR - I take 3% of the initial principal balance each year, with inflation adjustments. So in "real" terms (ignoring CPI's potential shortcomings), I'm taking that 3% SWR each and every year. The variable component does not affect the 3% fixed component. With my original $1 million nest egg example, I'm taking $30,000 fixed every year, with inflation adjustments.

Then on top of the fixed component, I also withdraw a "variable" component. In this case, I'm talking about a 2% variable withdrawal. Each year, I take 2% of the total portfolio value. If my portfolio falls 50% to $500,000, I only get $10,000 for the variable component. If my portfolio goes up 50% to $1,500,000, I take $30,000 for the variable component.

At a minimum, the fixed 3% SWR gives me $30k/yr w/ inflation adjustments. The variable 2% SWR will usually get me up to $40k+/yr and in most years will put me well above $40k/yr.

I plan on ERing in my 30's, and I hope to have 4+ decades of living. Since the SWR calculations are based on the worst case returns and not on the average returns, I'm expecting to have a rather large portfolio 20-30-40 years out. With the hybrid fixed/variable withdrawal strategy I get to enjoy some of that portfolio growth. I don't want to be 65 years old with a $3,00,000 inflation adjusted portfolio and still be taking $40,000/yr inflation adjusted dollars when I can be taking $90,000/yr inflation adjusted dollars under the hybrid 3%/2% strategy ($30,000 fixed withdrawal plus 2% of $3,000,000 = $60,000 variable withdrawal).

The trade off of having an initial 5% hybrid withdrawal rate (and higher standard of living) with a little uncertainty from year to year is better for me than a 4% fixed withdrawal rate forever.

I have to have a plan to spend my money decades in the future.

If 10-20% of my years are spent with a small degree of scrimping and saving, and the rest are filled with living the high life (or at least 25% higher life), then that is ok with me. In reality, I probably wouldn't spend all of the surplus during the "good years".

By the way, I plan on having more than $40k/yr income in retirement and a nest egg larger than $1,000,000. The example I used was nice and round for illustrative purposes only.
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 10:48 AM   #25
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Re: PBS Frontline - Can You Afford to Retire?

Quote:
Originally Posted by youbet
I can tell you with candor that as I stand on the brink of retirement, removing this discretionary spending from my budget to accomodate a lower SWR would be a very, very unhappy thing! In fact, if I thought that was the situation, I would stay at work a little longer.
If I had to give up virtually all discretionary spending, it wouldn't be so bad--hmm, that's why I call it discretionary 8). Instead of 2-3* hotels, it would be camping and visiting friends & relatives. Been there, done that--it was fun. Driving to big bro's cottage near the Hamptons and our friends' cottage on Edisto would hardly be a sacrifice. Doing without cable/satellite/Netflix/Barnes & Noble means borrowing books & DVDs & CDs from other folks (and lending ours)--no problemo, I already do a bit of that. Local beach walks, kayaking, biking, and art gallery crawls are free (so is sex...and what could be more entertaining?!)--hokay. Eating at home every day...I'm cool with that, love to cook. Buying a new-to-me car or computer...not so bad really, done it before. We could drop down to one car easy if DH retires. We live walking distance from grocery shopping and mail order our presriptions. And how about combining that long-desired trip to Thailand with a little dental work/surgery I could get into that. Of course they'll have to pry the Internet from my cold, dead hands...but I can use it for free at the library or my brother's home or office.

Maybe it helps that I was working class in my 20s (with kids yet), so I know how to handle it. Also my grandparents lived in a tiny public-housing apartment, and they were happy. Knowledge is power!
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 10:52 AM   #26
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Re: PBS Frontline - Can You Afford to Retire?

Justin,
I haven't run the numbers, and it looks like you have, so take this for what it is worth (i.e. maybe nothing). IMO, (disregarding the variable portion of your withdrawal strategy) the fixed portion (starting at 40K and adjusting for inflation, regardless of the performance of your portfolio) puts you at risk of getting into a bad situation. You could find yourself in the situation youbet described--taking a big % of your portfolio's value because it hasn't kept up with inflation and/or the rate of your previous withdrawals. Are you realy going to take out 40K PLUS the variable portion if your portfolio has declines to $500K? If you think you will, then I think you may need to really reconsider this. If you can see that you'd never do that, then it would seem best to start with a plan that is more tightly pegged to your portfolio's changing value from the start (allowing you to make spending decisions more gradually, rather than getting into a hole). For me, that would be something close to ESRBob's "4%variable with a 95% floor" approach.

But:, re-read the first line above.
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 11:52 AM   #27
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Re: PBS Frontline - Can You Afford to Retire?

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Originally Posted by astromeria
Maybe it helps that I was working class in my 20s (with kids yet), so I know how to handle it. Also my grandparents lived in a tiny public-housing apartment, and they were happy. Knowledge is power!
It's all in the semantics astromeria.* Many of the items you mention as still remaining after eliminating "discretionary" spending, would be gone with my definition.*That's just a personal thing.

In any case, it's nice you have relatives with vacation homes at your disposal, etc.* We don't.* We'll be paying our own way for everything we do. We also postponed some travel and other niceities earlier in life for various reasons and made some other sacrifices.* Therefore we have chosen to plan retirement finances so that our withdrawal rate doesn't need to be reduced even in hard times and allows us to do some discretionary spending, especially for travel.

My advise, for what it's worth, is simply that younger folks consider the concept that when you actually reach retirement age and are about to begin, scratching out expense items like travel or entertainment may not seem as appealing as it did when you were younger.* If it isn't too odeous to increase the nest egg to a point where severe budget cuts are unlikely, even in hard times, it may well be worth it.

You've obviously thought it through and know that living under an extremely restricted budget would be fine for you folks.* I commend you for thinking it through and I'm sure you are correct for yourselves.* A lot of my fellow boomers haven't and the world seems to be full of folks whose retirement budgets will result in a lifestyle that is going to disappoint them.

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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 12:04 PM   #28
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Re: PBS Frontline - Can You Afford to Retire?

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Originally Posted by samclem
Justin,
I haven't run the numbers, and it looks like you have, so take this for what it is worth (i.e. maybe nothing). IMO, (disregarding the variable portion of your withdrawal strategy) the fixed portion (starting at 40K and adjusting for inflation, regardless of the performance of your portfolio) puts you at risk of getting into a bad situation. You could find yourself in the situation youbet described--taking a big % of your portfolio's value because it hasn't kept up with inflation and/or the rate of your previous withdrawals. Are you realy going to take out 40K PLUS the variable portion if your portfolio has declines to $500K? If you think you will, then I think you may need to really reconsider this. If you can see that you'd never do that, then it would seem best to start with a plan that is more tightly pegged to your portfolio's changing value from the start (allowing you to make spending decisions more gradually, rather than getting into a hole). For me, that would be something close to ESRBob's "4%variable with a 95% floor" approach.
I am NOT proposing taking a 4% fixed SWR AND an additional 2% variable withdrawal rate. I'm saying take 3% fixed SWR and 2% variable. That's $30k/yr+inflation plus whatever 2% of the portfolio value is. The $40k yr is the combination of the 3% fixed SWR and the variable withdrawal, given a 50% drop in portfolio value.

Limited downside potential and significant upside potential.
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 12:17 PM   #29
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Re: PBS Frontline - Can You Afford to Retire?

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Originally Posted by justin
Let's say I retire with $1,000,000 and I plan on taking $40,000/yr fixed (w/ inflation adjustments). *That's the default w/ the 4% SWR. *
Quote:
Originally Posted by youbet
I'm really having trouble understanding. *Sorry.
If your portfolio drops to $500K and you withdraw $40K, doesn't that mean your withdrawal percentage of your portfolio for that year is a whopping 8%? * *How does taking 8% help overcome the massive loss in portfolio value?
Quote:
Originally Posted by samclem
I haven't run the numbers, and it looks like you have, so take this for what it is worth (i.e. maybe nothing).* IMO, (disregarding the variable portion of your withdrawal strategy) the fixed portion (starting at 40K and adjusting for inflation, regardless of the performance of your portfolio) puts you at risk of getting into a bad situation.* You could find yourself in the situation youbet described--taking a big % of your portfolio's value because it hasn't kept up with inflation and/or the rate of your previous withdrawals.
You guys are mixing the vocabulary of initial withdrawal rates with annual withdrawal rates.

Withdrawing 4% of a $1M portfolio, and raising that initial withdrawal rate for inflation, works just fine according to FIRECalc. *You have to hope that the early bear market (with its occasional annual withdrawal approaching 8-10%) doesn't drain the portfolio before it recovers. *If the portfolio zooms up on a bull market right after retirement, then the annual withdrawals are down in the 3% range-- which makes the "initial 4% SWR" look pretty smart.

Bob Clyatt's book also uses the "4%" vocabulary but his withdrawal rate is annual, not initial.

What I would do is pad your ER portfolio calculations with a ridiculously long lifespan, a budget with discretionary spending that stays constant with aging (just in case you stay constant despite aging!), and even some provision for a variable withdrawal for capital expenses. *If you add international investments, commodities, & REITS (plus other asset classes that haven't necessarily accumulated a century of data) to that portfolio then you're probably even more survivable. And if you can live off your dividends without touching the principal, you've arrived at a self-sustaining portfolio! However I doubt that most people are willing to work/save for such a lofty goal.

I don't know about you guys, but having made those assumptions (except for the self-sustaining part) encouraged us to work for a bigger portfolio that easily handles our non-discretionary spending (including our mortgage payment). A 20% decline in the portfolio isn't a concern. 40% might make me crunch some numbers but we've made it through that before. Maybe our teenager is cramping our empty-nester spending opportunities (hard to believe that) but our spending has actually declined during the first few years of ER. I can only buy so many longboards, and frankly we're having a little trouble "ramping up" our spending during the good years. (But I'm no fool, either-- I'm not going to share TH's Lexus thread with my spouse!) When you watch the market drop like it's been doing this month, it's a comfort to remember that we're sitting on at least two years' cash. We're only trying to figure out how big the dip is before we start buying into it... which excites me more than the prospect of upgrading my vacation airfare tickets to first-class seating.

What I wouldn't do is fling apples & oranges between the "initial SWR" and "annual withdrawal" camps.
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 12:30 PM   #30
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Re: PBS Frontline - Can You Afford to Retire?

Justin,
I underestand the 3% fixed plus 2% variable (I just didn''t apply to dollars correctly). My point is: Basing a strategy on a fixed amount plus inflation (even if it is three percent) entails the risk of outspending your assets (since your portfolio may or may not be tracking inflation).
I think a withdrawal strategy based on inflation has considerable downside risk (running out of money, or doing damage to the portfolio balance from which recovery is not possible). I would not be comfortable with a 3% fixed rate (though historically it has done okay), never mind a 3% fixed rate plus a variabe component.


But--that what gives us lots to talk about here.

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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 12:49 PM   #31
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Re: PBS Frontline - Can You Afford to Retire?

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What I wouldn't do is fling apples & oranges between the "initial SWR" and "annual withdrawal" camps.
Interesting comments Nords.* Actually, there is no confusion between initial SWR and annual withdrawal when discussing justin's plan.* He's proposing both.* A 3% initial SWR plus an additional 2% of the actual portfolio balance for the particular year.

Regarding budgets.........* There sure seems to be a lot of confusion regarding the relationship between SWR and budget.* Actually, they are totally independent.* For example, if you calculate SWR with the Firecalc methodology, you believe 4% is the number.* If you have $100, you withdraw $4 per year and adjust for inflation going forward.* If your desired budget is $3, the SWR is still $4.* If your desired budget is $5, the SWR is still $4.* If you begin SS and need to withdraw less from your portfolio, the SWR is still $4.*

SWR is simply the withdrawal rate you believe is safe calculated by the method of your choice and it is what it is regardless of your budget needs or other income sources.

I know I'm preaching to the choir in your case Nords.........
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 12:50 PM   #32
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Re: PBS Frontline - Can You Afford to Retire?

samclem,

So in other words you don't use FIREcalc to estimate a safe withdrawal rate?

Most here assume 4% SWR to be very safe. I would posit that the 3% fixed SWR plus 2% variable SWR is similarly safe. Now if you don't believe that 4% SWR is safe, that is a different discussion that has been discussed here before. Based on historical market returns over the last century or so, and assuming the future is no worse than the past, 4% is "safe".

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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 12:55 PM   #33
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Re: PBS Frontline - Can You Afford to Retire?

That's a good point youbet. Just because one's portfolio can support a 4% SWR doesn't mean one has to take out 4%+inflation every year. That was an unstated implicit assumption in my hybrid withdrawal method - at some point the SWR gets a lot higher than I would really care to withdraw and spend, so in effect I would "reinvest" what I didn't spend.

If done often enough, I should be able to "cheat" in down years and exceed the 3% fixed/2% variable withdrawal rate.
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 08:19 PM   #34
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Re: PBS Frontline - Can You Afford to Retire?

Before I started on the Guyton model, I was playing around with a fixed + variable model and it works pretty well.* I was somewhere around 3%Fixed + 2.5%Var or 3%Fixed + 2Var, no failures.*

Along a similar vein from my previous post and considering the FL show last night, I have thought of a new presentation on the failures data for my 5 models.* The graph is below, but let me explain.
I have graphed each model using the starting withdrawl rate against the time in the plan(death-retirement, presumably).* I start at a 10 year plan and go out to 50 years.* The withdrawl rate graphed is the first instance of the model failing during the cycle.*

Take the fixed model at 30 years which yields a reading of 4.5%.* Using a withdrawl % less than 4% would have no failures.* Anything equal or above has an increasing number fo failures. So anything below the* model in terms of withdrawl rate is a SWR for that model and time frame.*

Now the graph looks as one would expect, declining as the plan becomes longer.* Note the fixed model and blob #1 which is where most here operate at 4% Fixed SWR model for 30 or 40 years.* Below the model line are the SWR's.* Using one of the other models, I could operate at 5% or maybe slightly higher.*

Note blob #2 (10 to 20 year plan) in an area I would term for very late retirees.* It could also be a bridge area where a draw down plan is in place until the pension and/or SS starts.* Depending on the model withdrawls for 10 year are from 8% to as high as 10.5%.* For 20 years, the range is 5.5% to 7%.

Now blob #3 for very early retirees or those that are planning on living a very long time, a 50 year horizon.* For this timeframe the fixed model starts to breakdown quickly.* The other models settle out at around 5% to 5.5% but breakdown eventaully but at different rates.*

For those currently in a 30 to 40 year plan, they could increase (reset) their withdrawl % as their plan horizon shortens over time.

BTW the numbers in this chart differ slightly than the individual simulations previousily shown beacuse the run is based on increments of .5% moves rather than .2% increments.




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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 10:05 PM   #35
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Re: PBS Frontline - Can You Afford to Retire?

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Productivity gains are more important than population gains for growth, and will be even more so in the future. One smart guy who invents a machine that makes car parts instead of a hundred thousand humans making those car parts is doing more for the economy than thousands and thousands of immigrant laborers.

Heck, most unskilled immigrants probably cost the economy a bit more than they add to it, or barely break even.
I agree with both your statements here.

It is a mistake to assume that social security payments can only come from SS taxes. Why should this be true? Because that is how it has always been done? That leads to some very stupid economic policy, and if we are thinking, we will avoid that. There is no good reason why a robot working in Detroit can't contribute the same or more to social security funding as any number of uneducated immigrants, who are mostly off the books anyway. And the robots won’t be going on welfare or filling up our prisons. Or creating what Wab refers to as “people who are so poor the only way they can help themselves is through crime.”

Warren Buffet addressed this at the recent Berkshire annual meeting. He says there is no real finance problem, only a lot of political smoke.

I posted the link to his comments earlier- it got 0 responses.*

Ha
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 10:47 PM   #36
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Re: PBS Frontline - Can You Afford to Retire?

Ha,

Sorry, I missed it. Could you kindly post the link again for a lazy bum like myself who can't find it in the thousands of messages.

Thanks!
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-17-2006, 11:57 PM   #37
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Re: PBS Frontline - Can You Afford to Retire?

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Ha,

Sorry, I missed it.* Could you kindly post the link again for a lazy bum like myself who can't find it in the thousands of messages.

Thanks!
Gladly, Papi.

http://early-retirement.org/forums/i...5111#msg135111

I guess it is OK to quote the relevant part. It's from Tom Brown's "Bankstocks.com" Moderators please remove if the quote is too long. I think the subject is quite important. WB is Warren Buffet; CM is Charlie Munger.


"Where should a rich country like the U.S. draw the line on entitlements?

WB: Every society decides what to do with its oldest and youngest members. They are its least productive members; they don't turn out goods and services, but consume them. In 1935, the country decided that the federal government should play a role in helping to take care of older citizens, when it enacted the Social Security program. There is some merit in the idea that 65 is too low a retirement age. That's in the process of being changed. But in a society as wealthy as ours, where GDP per capita is $40,000, there are plenty of resources to use to help support older people. Not everyone needs help. Some people, like Charlie and me, have been wired to be able to make money. Those people will have more than enough to provide for themselves as long as they live. But not everyone is wired that way. They won't be able to take care of themselves once they stop working. The country is wealthy enough that it can easily handle the Social Security question.

I find it ironic that this administration, which thinks nothing of running up fiscal deficits of $300 billion to $400 billion per year, is so concerned about the idea that Social Security could have a $100 billion deficit several years from now.

It's true that the ratio of workers to retirees is only 2 to 1. But worker productivity is going up every year. There's always been a struggle over how to divvie up the wealth pie. But that pie is big, and it's growing. This is a problem that the country can easily take care of.

CM: I've read the evidence put together by people like Pete Peterson, but have come to a different conclusion. If the country grows in real terms by 2% to 3% per year, it should be child's play to take a share of that pie and divert it to older people. It's crazy to freeze the share of wealth devoted to retirees at some arbitrary level set sometime in the past. The society has a responsibility to pay a little more than it has in the past, as the population of retirees grows. Social Security is one of the most successful programs in the history of the country. It is very efficient and has low overhead.

WB: The government had no reluctance counting the Social Security surplus as part of the overall fiscal surplus, when the budget was first unified in 1969. But now that the trust fund is set to go into deficit, suddenly the system has pay for itself."




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Re: PBS Frontline - Can You Afford to Retire?
Old 05-18-2006, 08:29 AM   #38
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Re: PBS Frontline - Can You Afford to Retire?

I've got a question about productivity in a service-based economy:

GDP is the total value of all goods and service produced/performed. We can grow GDP by increasing the productivity of those producing goods; they make more stuff for the same cost.

With services, the value of the services is equal to the cost... So if we just start tipping the wait staff more, that increases the restaurant GDP?

Is that the future? We have to switch to consuming luxury services to increase the "productivity" of our service sector?

That doesn't sound too bad....
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-18-2006, 08:41 AM   #39
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Re: PBS Frontline - Can You Afford to Retire?

Thanks for the link, Ha.

Interesting how WB compares the current deficit spending to the SS problem.* It's a nice way for a laymen like myself to get a feel for the magnitude of the problem.

I wonder how WB is determining that (American) worker productivity will increase in the future?* That seems like a big assumption to me that addresses the 2:1 worker to retiree ratio.* I just checked with my trusty oracle (that is NEVER wrong* ) and she says that worker productivity will stay flat to a slight increase over the next few decades.* That is until the next big technological advancement gives productivity a shot of adrenaline in the arm.* Case in point is that I'm posting here while I should be debugging this nasty C++ problem*
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Re: PBS Frontline - Can You Afford to Retire?
Old 05-18-2006, 11:08 AM   #40
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Re: PBS Frontline - Can You Afford to Retire?

Quote:
Originally Posted by Papi
Case in point is that I'm posting here while I should be debugging this nasty C++ problem*
Well, your productivity will never rise if you're still programming in C++. Although it's nice to see that not all the COBOL & C++ programmers have left us...
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