Saving Money is STUPID!!!

[ivinsfan]

Quote:

Originally Posted by LARS I have a very smart friend (former Wall Street colleague) who recently made the argument that "saving could be stupid". His point, highly summarized, is that the bulging Baby Boomers will cause tremendous $ strain to SS and Medicare post-2030. Thus, those with "savings" will be targeted to pay their "fair share". Hence, if you spent it, and didn’t save it, you'll still get benefits.

This summaries one of the most amazing things to me about current ACA law, they don't care how many assets you have, just about your yearly income. I've never understood why this has been the case. On a FAFSA form you literally have to list everything except the food in your pantry. Everything besides tax deferred retirement accounts is counted towards the parental contribution.

[Denverite]

Very sorry for your loss. Losing your Father is a very tough chapter in life. Went through it myself in 2006.

One additional thought on Aunt Pisser. You can bet that if she gets into financial difficulty in the future, she'll quickly be at your door asking for a loan. She'll have some equally self-righteous reasons for why you should loan the money without question. You are family after all, right?

I'd tell her then you took her "saving money is stupid" advice to heart and now have no funds to loan.

[Dtail]

Quote:

Originally Posted by ivinsfan This summaries one of the most amazing things to me about current ACA law, they don't care how many assets you have, just about your yearly income. I've never understood why this has been the case. On a FAFSA form you literally have to list everything except the food in your pantry. Everything besides tax deferred retirement accounts is counted towards the parental contribution.

It does seem strange, but many people on this site including myself manage our MAGI for ACA. For whatever reason, they kept this loophole.

[ncbill]

Quote:

Originally Posted by LARS I have a very smart friend (former Wall Street colleague) who recently made the argument that "saving could be stupid". His point, highly summarized, is that the bulging Baby Boomers will cause tremendous $ strain to SS and Medicare post-2030. Thus, those with "savings" will be targeted to pay their "fair share". Hence, if you spent it, and didn’t save it, you'll still get benefits.

Then just do what the more conservative poster on bogleheads recommend - move all assets into an irrevocable trust, pick an attorney as trustee (can't be compelled to reveal the beneficiaries), and so benefit from the assets without them ever being able to be traced back to you.

[USGrant1962]

Quote:

Originally Posted by ivinsfan This summaries one of the most amazing things to me about current ACA law, they don't care how many assets you have, just about your yearly income. I've never understood why this has been the case. On a FAFSA form you literally have to list everything except the food in your pantry. Everything besides tax deferred retirement accounts is counted towards the parental contribution.

I think that the simple answer is that ACA was implemented through the tax code, and asset taxes are unconstitutional. If Congress did not intertwine health insurance with the tax code (a really dumb idea IMO) then perhaps it could have asset tests.

[ncbill]

Quote:

Originally Posted by ivinsfan This summaries one of the most amazing things to me about current ACA law, they don't care how many assets you have, just about your yearly income. I've never understood why this has been the case. On a FAFSA form you literally have to list everything except the food in your pantry. Everything besides tax deferred retirement accounts is counted towards the parental contribution.

I think you're referring to the CSS Profile, where the parents have to list everything from equity in home/business down to the gold fillings in their teeth.

Under FAFSA if parental income is under $50,000 & parents are eligible to file 1040A/EZ (i.e. no Schedule D required) then the simplified needs test can be used and no parental or child assets need be disclosed.

[LARS]

Quote:

Originally Posted by ncbill Then just do what the more conservative poster on bogleheads recommend - move all assets into an irrevocable trust, pick an attorney as trustee (can't be compelled to reveal the beneficiaries), and so benefit from the assets without them ever being able to be traced back to you.

I think I will take my chances before I ever dumped assets into irrevocable trust, but it does highlight the problem of asset testing.

Though I wonder if you could do/achieve the same if you made your spouse the Trustee? That might be interesting...

[athena53]

Quote:

Originally Posted by LARS I have a very smart friend (former Wall Street colleague) who recently made the argument that "saving could be stupid". His point, highly summarized, is that the bulging Baby Boomers will cause tremendous $ strain to SS and Medicare post-2030. Thus, those with "savings" will be targeted to pay their "fair share". Hence, if you spent it, and didn’t save it, you'll still get benefits.

I know- even though current taxes aren't based on assets they ARE based on income, which can be a function of assets, and I've been paying taxes on SS income since 2003 when late DH and I married. He was 65 and collecting SS, I was 50 and working FT. Next year- oh, joy- I'm in line for IRMAA surcharges on my Medicare premiums.

I comfort myself with the thought that, even though some of my money gets sucked away to subsidize people who could have saved for retirement but spent every dime they made (in addition to the ones who worked minimum-wage jobs and just couldn't save much), the people who rely on those programs have limited choices- where they live if they want subsidized housing, what LTC they use if they rely on Medicaid to pay for it.... and if they're unhappy they have few options to move elsewhere. If a tooth underlying a crown goes bad and needs extraction no social program is going to pay for an implant. Life on these programs provides the bare basics... and that's as it should be. I'm hoping that I'll have enough income left after taxes to be able to have a better quality of life.

[LARS]

Quote:

Originally Posted by athena53 I know- even though current taxes aren't based on assets they ARE based on income, which can be a function of assets, and I've been paying taxes on SS income since 2003 when late DH and I married. He was 65 and collecting SS, I was 50 and working FT. Next year- oh, joy- I'm in line for IRMAA surcharges on my Medicare premiums. I comfort myself with the thought that, even though some of my money gets sucked away to subsidize people who could have saved for retirement but spent every dime they made (in addition to the ones who worked minimum-wage jobs and just couldn't save much), the people who rely on those programs have limited choices- where they live if they want subsidized housing, what LTC they use if they rely on Medicaid to pay for it.... and if they're unhappy they have few options to move elsewhere. If a tooth underlying a crown goes bad and needs extraction no social program is going to pay for an implant. Life on these programs provides the bare basics... and that's as it should be. I'm hoping that I'll have enough income left after taxes to be able to have a better quality of life.

I pretty much comfort myself that the problem is so out of my control that I don’t spend a lot of time worrying about. Add to that I am much closer to the end of my journey than the beginning so time horizon to manage the problem is shortening (unfortunately) everyday...

[Huston55]

Quote:

Originally Posted by LARS I have a very smart friend (former Wall Street colleague) who recently made the argument that "saving could be stupid". His point, highly summarized, is that the bulging Baby Boomers will cause tremendous $ strain to SS and Medicare post-2030. Thus, those with "savings" will be targeted to pay their "fair share". Hence, if you spent it, and didn’t save it, you'll still get benefits.

WADR, this just proves that everybody on Wall Street is not that smart.

[tmm99]

So sorry for your loss. I am glad you could be there for him all the way till the end, and I'm sure you made the last days of your dad's life easier for him.

[athena53]

Quote:

Originally Posted by Huston55 WADR, this just proves that everybody on Wall Street is not that smart.

But he's right! My parents cheerfully told us years ago when we started applying to colleges that we wouldn't qualify for needs-based scholarships because they'd saved for our educations. They never even bothered to fill out the "Parents' Confidential Statement".

I'll stand by my point, though: while there will be a safety net for those who didn't save, it won't be pretty and there will be few choices, especially as the number of needy baby boomers increases.

[LARS]

Quote:

Originally Posted by Huston55 WADR, this just proves that everybody on Wall Street is not that smart.

Well I don’t know you, but I do know him and I can assure that he is very smart. One of the smartest guys I dealt with in my Investment Banking days, which more than likely makes him a lot smarter than you.

But thanks for your constructive comment...

[ivinsfan]

Quote:

Originally Posted by ncbill I think you're referring to the CSS Profile, where the parents have to list everything from equity in home/business down to the gold fillings in their teeth. Under FAFSA if parental income is under $50,000 & parents are eligible to file 1040A/EZ (i.e. no Schedule D required) then the simplified needs test can be used and no parental or child assets need be disclosed.

Right because you don't any assets to speak of anyway.. I mean regular FAFSA...

[Chuckanut]

Quote:

Originally Posted by kcowan It is possible to live rich without money. It just requires a different definition of rich.

And often requires sticking other people with the bill! I have known several people who lived as though they made well into 6 figures. Any person and any business who they owed money paid the price for their high living.

[Huston55]

Quote:

Originally Posted by LARS Well I don’t know you, but I do know him and I can assure that he is very smart. One of the smartest guys I dealt with in my Investment Banking days, which more than likely makes him a lot smarter than you. But thanks for your constructive comment...

No offense intended. But, dumb advice is dumb advice, regardless of where it originates: the OP’s Aunt or your smart Investment Banking friend. BTW, recognizing dumb advice, even especially from smart people, is very constructive and has assisted many here, at BH and elsewhere to accumulate and retain their assets.

[ivinsfan]

Quote:

Originally Posted by Huston55 No offense intended. But, dumb advice is dumb advice, regardless of where it originates: the OP’s Aunt or your smart Investment Banking friend. BTW, recognizing dumb advice, even especially from smart people, is very constructive and has assisted many here, at BH and elsewhere to accumulate and retain their assets.

Got to agree, that comment from the banker was either sarcasm which I despise..(my grandad said that sarcasm is the lowest form of ignorance) or akin to telling someone to cut off their nose to spite their face...

[LARS]

Quote:

Originally Posted by Huston55 No offense intended. But, dumb advice is dumb advice, regardless of where it originates: the OP’s Aunt or your smart Investment Banking friend. BTW, recognizing dumb advice, even especially from smart people, is very constructive and has assisted many here, at BH and elsewhere to accumulate and retain their assets.

Well I’ve found over the years the second I think I’m smarter than another smart guy, and worst smug about it, is usually when I get my head handed to me.

And to elaborate on his point, which I did not state in my initial comment, what he is astutely pointing out is that there is potential risk ending up in no man's land. Either be very well off or spend your money (i.e. don’t save so to speak).

Because if you're in the middle, which is where the real "money" is from the Government's perspective, you will have saved only to effectively fund your own benefits as you are means tested. So you might as well spend now knowing you will get benefits in the future. Otherwise you are foregoing consumption today to pay for your own SS/Medicare benefits in the future.

If you are rich you can withstand future means testing and self fund...

[W2R]

Quote:

Originally Posted by ivinsfan Got to agree, that comment from the banker was either sarcasm which I despise..(my grandad said that sarcasm is the lowest form of ignorance) or akin to telling someone to cut off their nose to spite their face...

Very well could be true.

That said, personally I am not smart enough to know if the banker's statement was smart or not. Only time will tell, I suppose, and I don't think there is even one mortal human being who is smart enough to predict the future with much accuracy.

I do know that for ME, in my situation, it was good that I saved when I did. I am too much of a nervous Nellie to have been happy doing anything else.

[ivinsfan]

Quote:

Originally Posted by W2R Very well could be true. That said, personally I am not smart enough to know if the banker's statement was smart or not. Only time will tell, I suppose, and I don't think there is even one mortal human being who is smart enough to predict the future with much accuracy. I do know that for ME, in my situation, it was good that I saved when I did. I am too much of a nervous Nellie to have been happy doing anything else.

Time does decide a lot of things and each person makes their own decisions. And I'm with you, with all the political upheaval going on now, no way I'd count on anybody's money but my own.

The difference between having lots of assets and paying extra taxes and spending your money on stuff and hoping someone else's money takes care of you is night and day.