Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-24-2009, 03:55 PM   #21
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
Let's face it SS was created to keep politicians in office. Nothing more Nothing less. Now, it is time to pay for it, and current politicians are scrambling to find a new way to buy your vote. And, the vote they will be trying to buy is Group 3.

As to the comment ' It just depends on what you define as rich' plays to the heart of the problem Not in my back yard! As long as it is above me screw them. For centuries Americans were smart enough to realize that this was bad thinking. Now the current generation thinks this way. IMHO it is the start of the death of the U.S. as we know it.
__________________

__________________
If it is after 5:00 when I post I reserve the right to disavow anything I posted.
Rustic23 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-24-2009, 04:27 PM   #22
Recycles dryer sheets
gryffindor's Avatar
 
Join Date: Mar 2008
Posts: 51
I don't know how to protect myself from the fleecing that's likely to happen. But I can think of a couple of assumptions that may not be valid and lie at the heart of some people's retirement planns.

State pensions are stable. If states do go bankrupt, there is likely going to be some way for states to reduce the value of the pensions. I have a good friend who is an ER doc who is in late 40's and counting on the value of his California Costra County pension to fund 80% of his early retirement at 55. Given what's happening in California, that's a big assumption

Can rely on payouts from annuities themselves.
Many of the annuities out there were insured by AIG; I haven't seen how many people have gotten hurt by this, but there's not the same degree of protection in that contract as there is by FDIC insurance. Relying on the strength of a single financial institution with your annuity could be a big risk

Value of the currency. If the government has thrown $1 trillion to cover liabilities without really writing them off at some point the dollar will depreciate dramatically.

So here are a couple of hypotheses I have for me, not advocating them for others

1) Higher international equity exposure that is unhedged to give you currency exposure-- the world is not going to completely fall apart, but US economic strength relative to others could stumble significantly.
2) Higher inflation protection - commodities, REITs, TIPs
3) More liquidity - am looking to make sure my investments are more liquid to be able to react more quickly
4) Looking to diversify by institution, not just by asset class
__________________

__________________
Gryffindor
gryffindor is offline   Reply With Quote
Old 05-24-2009, 04:57 PM   #23
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Quote:
Originally Posted by Rustic23 View Post
Let's face it SS was created to keep politicians in office. Nothing more Nothing less. Now, it is time to pay for it, and current politicians are scrambling to find a new way to buy your vote. And, the vote they will be trying to buy is Group 3.

As to the comment ' It just depends on what you define as rich' plays to the heart of the problem Not in my back yard! As long as it is above me screw them. For centuries Americans were smart enough to realize that this was bad thinking. Now the current generation thinks this way. IMHO it is the start of the death of the U.S. as we know it.

Nah the death of America started in the 60's
__________________
Notmuchlonger is offline   Reply With Quote
Old 05-24-2009, 05:03 PM   #24
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Quote:
Originally Posted by gryffindor View Post
I don't know how to protect myself from the fleecing that's likely to happen. But I can think of a couple of assumptions that may not be valid and lie at the heart of some people's retirement planns.

State pensions are stable. If states do go bankrupt, there is likely going to be some way for states to reduce the value of the pensions. I have a good friend who is an ER doc who is in late 40's and counting on the value of his California Costra County pension to fund 80% of his early retirement at 55. Given what's happening in California, that's a big assumption

Can rely on payouts from annuities themselves.
Many of the annuities out there were insured by AIG; I haven't seen how many people have gotten hurt by this, but there's not the same degree of protection in that contract as there is by FDIC insurance. Relying on the strength of a single financial institution with your annuity could be a big risk

Value of the currency. If the government has thrown $1 trillion to cover liabilities without really writing them off at some point the dollar will depreciate dramatically.

So here are a couple of hypotheses I have for me, not advocating them for others

1) Higher international equity exposure that is unhedged to give you currency exposure-- the world is not going to completely fall apart, but US economic strength relative to others could stumble significantly.
2) Higher inflation protection - commodities, REITs, TIPs
3) More liquidity - am looking to make sure my investments are more liquid to be able to react more quickly
4) Looking to diversify by institution, not just by asset class
I have my doubts about California pensions too. However this state continues to amaze me. Politicians finally said the public has spoken on the latest vote for tax increases that were slammed down. This was after they already decided to raise vehicle registration fees and increase the sales tax. One of the comments was something to the effect " Gee we might need to cut back a few social programs or something"

Ya gee you really think so..
__________________
Notmuchlonger is offline   Reply With Quote
Old 05-24-2009, 07:49 PM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by gryffindor View Post
I don't know how to protect myself from the fleecing that's likely to happen. But I can think of a couple of assumptions that may not be valid and lie at the heart of some people's retirement planns.

State pensions are stable. If states do go bankrupt, there is likely going to be some way for states to reduce the value of the pensions. I have a good friend who is an ER doc who is in late 40's and counting on the value of his California Costra County pension to fund 80% of his early retirement at 55. Given what's happening in California, that's a big assumption
California is seeking a bailout. If the California taxpayers are already dry, the US taxpayer will pick up your friend's retirement long before the public retirement systems will ever be controlled. See Italy for a good example.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 05-24-2009, 09:50 PM   #26
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,494
Quote:
Originally Posted by gryffindor View Post
My percentages were an intuitive estimate (which is why I put the ? after them). Since then I've gotten some better numbers from the Employee Benefit Research Institute

Employee Benefit Research Institute | EBRI

For 2007 Americans over the age of 55 -- assets not including home or pension
< $10k -30%
$10-25k - 6%
$25-50k - 13%
$50-99k - 10%
$100k - 15%
> $250k 26%

For 2007
Americans total age 65-67 or greater receiving a pension: 30% (17% in private sector / 13% in public sector)
Age 65-67 -- mean pension income $18k - private sector $12.5k ; public sector $23.7k

So around 30% will receive a pension
26% have assets that look like they will be able to retire OK (the > 250k group); if we assume that 30% of this group also is getting a pension (same distribution as the general population) then

we have about 52% of the population that will be be having difficulties
It pays (or costs) to note the date of the figures--2007.
Given what happened on the journey to 2009 and what we may encounter beyond, I think we will be only dreaming of these rosy (?) estimates.
__________________
JPatrick is offline   Reply With Quote
Old 05-24-2009, 09:53 PM   #27
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,494
Quote:
Originally Posted by Lawrence of Suburbia View Post
I've heard at least one congressman on Air America, talking to Randi Rhodes(?), float the idea of "spreading the wealth" of retirees - in essence, redistributing part of the assets of "rich" retirees to assist the "poor" ones, via some gov't scheme. Tellingly, the radio host didn't really object to the idea...!
No doubt the most shocking post I've found on this thread.

AAAAAAAARRRRRRRRRRRRRRRRRRR!!!

There's my share of the outrage...Anyone??
__________________
JPatrick is offline   Reply With Quote
Old 05-24-2009, 10:22 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,369
I believe Ziggy's assertion that pensioners might not save as much money for retirement is correct. Being a future pensioner I know most of my peers haven't either. Though not all pensions are just potential unfunded liabilities for taxpayers. The Missouri teachers retirement system is self funded with mandatory 13% contibutions monthly from both employee and school. What also helps is if a teacher quits teaching ( and alot do not last 5 years)they normally pull their money out, but by law the school match stays in the fund.
__________________
Mulligan is offline   Reply With Quote
Old 05-24-2009, 10:50 PM   #29
Recycles dryer sheets
Lawrence of Suburbia's Avatar
 
Join Date: Mar 2009
Location: Newcastle, WA
Posts: 110
Quote:
Originally Posted by JPatrick View Post
No doubt the most shocking post I've found on this thread.

AAAAAAAARRRRRRRRRRRRRRRRRRR!!!

There's my share of the outrage...Anyone??
Well, I would've thrown my shoe at the radio; but I was driving at the time.
__________________
Don't just do something; stand there!

- Jack Bogle
Lawrence of Suburbia is online now   Reply With Quote
Old 05-24-2009, 10:53 PM   #30
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,494
Quote:
Originally Posted by Lawrence of Suburbia View Post
Well, I would've thrown my shoe at the radio; but I was driving at the time.
Ah whatever, most of the shoe throwers I've witnessed lately were of poor aim anyway....
__________________
JPatrick is offline   Reply With Quote
Old 05-25-2009, 07:25 AM   #31
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 16,501
Quote:
Originally Posted by FIREdreamer View Post
As for the OP, I have no doubt that a significant percentage of people will end up in group#3. SS will provide them with just enough income to survive and they will have to find alternate sources of funding (work, reverse mortgages, kids, etc...) to have a shot at anything but the most Spartan lifestyle. But they lived through prosperous economic times with plenty of job opportunities and a 20-year raging bull market which could have boosted their retirement savings substantially. Had they taken advantage of these opportunities to save and invest, instead of ever seeking a more grandiose lifestyle, we would not be having this debate. So I am not enthused at all by the prospect of bailout out these people.
Agreed. DW and I have been LBYM for all our lives and the payoff should be now. Granted, I took a job that has a pension the likes of which hasn't been seen for years (100% COLAs, medical and prescription coverage for life) but who thinks about retirement at age 22? So I got lucky, admittedly it wasn't any great planning on my part, and in part I feel like I won the lottery, but I also paid my dues with 29 years in law enforcement. I can't count the number of times someone said "I couldn't do your job".

But we're also the ones who declined to clean out the savings or take a loan to go on a cruise with some other family members. And one of the ones who did that is now involuntarily working as a cashier at a job she hates. She's also the one who declined the opportunity for a free college degree when she was working at a university - one of the perks was two free classes a year for employees.
__________________
I heard the call to do nothing. So I answered it.
Walt34 is offline   Reply With Quote
Old 05-25-2009, 07:55 AM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,967
DW and I are in Group #2, and worried about being forced to subsidize Group #3 in the decades ahead. Even though our net worth has dropped over 20% thru this recession, I am still considering RE for other reasons that never occured to me before the OP's point. I have been very fortunate to have a good high-paying job, but it almost seems creating additional "wealth" may have marginal benefits. I'd almost rather retire earlier with fewer assets, living on less than we originally planned. If we wait longer and accumulate more, it will largely be taken away so why bother...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Old 05-25-2009, 11:11 AM   #33
Dryer sheet wannabe
 
Join Date: Jan 2007
Posts: 24
Quote:
Originally Posted by Midpack View Post
DW and I are in Group #2, and worried about being forced to subsidize Group #3 in the decades ahead. Even though our net worth has dropped over 20% thru this recession, I am still considering RE for other reasons that never occured to me before the OP's point. I have been very fortunate to have a good high-paying job, but it almost seems creating additional "wealth" may have marginal benefits. I'd almost rather retire earlier with fewer assets, living on less than we originally planned. If we wait longer and accumulate more, it will largely be taken away so why bother...
Wow, that reflects my thinking exactly. The best argument against retirement (and the main reason I continue to work) is to keep my skills current. They can take away my wealth, but not my education and skills.
__________________
Sand Pounder
Sand Pounder is online now   Reply With Quote
Old 05-25-2009, 11:28 AM   #34
Full time employment: Posting here.
old woman's Avatar
 
Join Date: Dec 2005
Posts: 551
Some pension plans are having problems too. My brother and mom get union pensions and they have been told there won't be a bonus check this year. When the pension is over funded they get a bonus check instead of an increase so the union doesn't have to cut benefits in bad years. My brother's wife is a school teacher and is delaying her retirement since the pension rules are changing now. Their retirement investments lost money too but they will be fine. He is 59 she is 58 and mom is 82 living with them. They have a in home business and mom gives them 1,500 a month for her room and board, she has her pension, dad's pension, SS, interest, and income from selling her old house so she has about 30K left after room and board and no bills except car insurance.
__________________
old woman is offline   Reply With Quote
Old 05-25-2009, 02:11 PM   #35
Full time employment: Posting here.
hankster's Avatar
 
Join Date: Jan 2008
Posts: 645
Quote:
Originally Posted by Midpack View Post
I don't know where the percentages come from (although believable), but I think the OP is right. Two comments:

1) If group #3 is that large, it will transform the workforce. 70% of Americans can't all be WalMart greeters.

2) Groups #1 & especially #2 (incl DW & I) will be in serious trouble because the politicians must pander to the majority to get re-elected. And guess who that is --- group #3, many (but not all) who are in their predicament through their own lack of planning. Get ready to be fleeced...no good deed goes unpunished. If you know how to protect yourself from the fleecing, let the rest of us in on it.

Are we headed down the path to a variant of socialism, the incentive to plan for a rainy day seems to be fading away.
I believe it was Scott Burns who talked about this in one of his books. One measure he recommended was to use liquid assets to pay off the home mortgage, figuring that the means-testing would look at one's liquid assets only. This assumes the government doesn't cook up a scheme to count our home's value as part of the equation.
__________________
"There is no dignity quite so impressive, and no independence quite so important, as living within your means." Calvin Coolidge
hankster is offline   Reply With Quote
Old 05-26-2009, 07:32 AM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,638
I think a lot of you are far too pessimistic about what the Feds will do to US (meaning boomer retirees). Remember, very few of US have any assets to confiscate. And politicians still have to deal with voters. How many young people will vote for a confiscatory approach to retirees that will bite them on their own arses when their time comes? Means testing on SS - sure. 20% capital gains - sure. Redistribution of our portfolios - come on. What is more likely is a general increase in income taxes to oh, maybe the Reagan era levels. Oh yeah, and an estate tax. Spend it while you can. As for SS itself, rather than disappear, I suspect younger folks seeing their stone broke boomer parents working at Wall Mart will push to shore it up - we all get old eventually.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 05-26-2009, 10:18 AM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by donheff View Post
Redistribution of our portfolios - come on.
I don't think it takes much to imagine a wealth tax on "the rich" like the French have. Something like a marginal rate of 0.5% to 1% that increases with higher levels of wealth and with a large exclusion for the first big chunk of your portfolio. Even something as little as 0.5% doesn't seem like a lot to ask. Until you consider that 0.5% would take more than 1/6 of the income stream from an ER taking a 3% SWR.
__________________
FUEGO is offline   Reply With Quote
Old 05-26-2009, 10:21 AM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by donheff View Post
Remember, very few of US have any assets to confiscate.
And that's the problem. Since the "very few" are the payors and the "very many" are the payees, the payors get outvoted.

Quote:
Originally Posted by donheff View Post
How many young people will vote for a confiscatory approach to retirees that will bite them on their own arses when their time comes?
I doubt the "reforms" will be specifically targeted at retirees, but instead at "the rich." Yes, some voters might look ahead and figure that these rates might hurt them later, but that will be a very small number. These would be Americans willing to delay today's gratification for a chance of more wealth in the future. If there were a lot of these people, our personal savings rate wouldn't have been hovering at less than 2% for the last decade.

Quote:
Originally Posted by donheff View Post
As for SS itself, rather than disappear, I suspect younger folks seeing their stone broke boomer parents working at Wall Mart will push to shore it up - we all get old eventually.
Maybe, but I hope instead that they'll learn that relying on government is a mistake and instead increase their savings to take care of themselves and their families.

The percent of voters who pay no net taxes or are net recipients of government checks is approaching a majority (by some accounts it has achieved a majority). In the past, the two things that prevented a wholesale confiscation/redistribution of wealth were the courts and a general belief in America that private property rights, even those of the wealthy, were important and that confiscation was, in the end, bad for everyone. I'm now less confident in both the courts and a continuation of this public sentiment going forward based on current events.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 05-26-2009, 10:40 AM   #39
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
I can tell you it would get my kids attention if the Feds confiscate my assets and I come to live with them! Talk about a landslide of new voters!
__________________
If it is after 5:00 when I post I reserve the right to disavow anything I posted.
Rustic23 is offline   Reply With Quote
Old 05-26-2009, 11:21 AM   #40
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,035
Quote:
Originally Posted by FUEGO View Post
I don't think it takes much to imagine a wealth tax on "the rich" like the French have. Something like a marginal rate of 0.5% to 1% that increases with higher levels of wealth and with a large exclusion for the first big chunk of your portfolio. Even something as little as 0.5% doesn't seem like a lot to ask. Until you consider that 0.5% would take more than 1/6 of the income stream from an ER taking a 3% SWR.
The insanity about the wealth tax is that you keep paying taxes on the same pot of money, year after year after year... Forget about "double taxation"... The wealth tax is the most intolerable form of taxes IMO (the estate tax is not far behind in my book). But luckily, the wealth tax is also difficult and expensive to implement and very few countries so far have shown a desire to go down that road (let's hope we keep it that way). Wealth taxes also encourage tax emigration. If you are a wealthy citizen, why not pick up your stuff and move to a country treating your wealth more favorably? Tax emigration has become a trend among wealthy French citizens. In 2006, 1000 wealthy French tax payers moved abroad taking with them their almost 3 billion euros in wealth. A thousand people may not sound like much (more than 500,000 people are subjected to the wealth tax), but the trend is accelerating and those who are leaving tend to be the very wealthy. People who created the wealth tax are outraged by this new trend of course (I guess they thought people would happily submit to the fleecing). Tax revenues from the wealth tax remain marginal at best (about 4 billion euros in 2008) yet other tax revenue streams are suffering because people who leave not only stop paying the wealth tax, they also stop paying property taxes, sales taxes, income taxes, capital gain taxes... But worse, they also take jobs with them (jobs that could to put 10% of the unemployed back to work according to some sources). Given the inefficiencies of such tax system, let's hope we stay off that path...
__________________

__________________
FIREd is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Baby Boomers are Now Delaying Retirement Retire Soon Life after FIRE 62 10-12-2008 10:37 AM
Early Boomers have reached Camelot for Retirement! whitestick Other topics 9 01-11-2008 07:08 PM
Boomers preventing their own retirement? Billy FIRE and Money 54 09-29-2007 10:53 PM
PBS: The Boomers Guide to Great Retirement mickeyd Other topics 19 12-19-2006 05:21 PM

 

 
All times are GMT -6. The time now is 12:11 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.