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 Post subject: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 09:10am
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From the New York Times, with some emphasis added:

Quote:
Our Ridiculous Approach to Retirement
By TERESA GHILARDUCCI
Published: July 21, 2012

I WORK on retirement policy, so friends often want to talk about their own retirement plans and prospects. While I am happy to have these conversations, my friends usually walk away feeling worse — for good reason.

Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.

This is basically food stamp level - which is one reason why that program is growing so well these days (there are others)

Quote:
In my ad hoc retirement talks, I repeatedly hear about the “guy.” This is a for-profit investment adviser, often described as, “I have this guy who is pretty good, he always calls, doesn’t push me into investments.” When I ask how much the “guy” costs, or if the guy has fiduciary loyalty — to the client, not the firm — or if their investments do better than a standard low-fee benchmark, they inevitably don’t know. After hearing about their magical guy, I ask about their “number.”

To maintain living standards into old age we need roughly 20 times our annual income in financial wealth. If you earn $100,000 at retirement, you need about $2 million beyond what you will receive from Social Security. If you have an income-producing partner and a paid-off house, you need less.

If you're willing to accept a lower standard of living that also helps - that might mean moving to a less expensive area, fewer exotic vacations, etc. Of course, most people don't have the resources to maintain even a moderately down-sized lifestyle, they're headed to actual poverty.

Quote:
This number is startling in light of the stone-cold fact that most people aged 50 to 64 have nothing or next to nothing in retirement accounts and thus will rely solely on Social Security.

Relying entirely on social security is a recipe for dire poverty, just in case anyone might have been unclear on that.

Quote:
Even for those who know their “number” and are prepared for retirement (it happens, rarely), these conversations aren’t easy. At dinner one night, a friend told me how much he has in retirement assets and said he didn’t think he had saved enough. I mentally calculated his mortality, figured he would die sooner than he predicted, and told him cheerfully that he shouldn’t worry. (“Congratulations!”) But dying early is not the basis of a retirement plan.

If we manage to accept that our investments will likely not be enough, we usually enter another fantasy world — that of working longer. After all, people hear that 70 is the new 50, and a recent report from Boston College says that if people work until age 70, they will most likely have enough to retire on. Unfortunately, this ignores the reality that unemployment rates for those over 50 are increasing faster than for any other group and that displaced older workers face a higher risk of long-term unemployment than their younger counterparts. If those workers ever do get re-hired, it’s not without taking at least a 25 percent wage cut.

Nonetheless, if you can manage it working until 70 is not a bad idea. However, any sane retirement planning needs to take into account the fact that even with the best genes and health there is no way to guarantee that one can do that. Most Americans due to retire in the next 20 years probably won't be able to continue working until 70, at least not full time.

Quote:
But the idea is tempting; people say they don’t want to retire and feel useless. Professionals say they can keep going, “maybe do some consulting” or find some other way to generate income well into their late 60s. Others say they can always be Walmart greeters. They rarely admit that many people retire earlier than they want because they are laid off or their spouse becomes sick.

Like the nation’s wealth gap, the longevity gap has also widened. The chance to work into one’s 70s primarily belongs to the most well off. Medical technology has helped extend life, by helping older people survive longer with illnesses and by helping others stay active. The gains in longevity in the last two decades almost all went to people earning more than average. It makes perfect sense for human beings to think each of us is special and can work forever. To admit you can’t, or might not be able to, is hard, and denial and magical thinking are underrated human coping devices in response to helplessness and fear.

In other words, those most likely to be able to continue working until 70 are those who are least likely to have a need to do so.

Quote:
So it’s not surprising that denial dominates my dinner conversations, but it is irresponsible for Congress to deny that regardless of how much you throw 401(k) advertising, pension cuts, financial education and tax breaks at Americans, the retirement system simply defies human behavior. Basing a system on people’s voluntarily saving for 40 years and evaluating the relevant information for sound investment choices is like asking the family pet to dance on two legs.

Not yet convinced that failure is baked into the voluntary, self-directed, commercially run retirement plans system? Consider what would have to happen for it to work for you. First, figure out when you and your spouse will be laid off or be too sick to work. Second, figure out when you will die. Third, understand that you need to save 7 percent of every dollar you earn. (Didn’t start doing that when you were 25 and you are 55 now? Just save 30 percent of every dollar.) Fourth, earn at least 3 percent above inflation on your investments, every year. (Easy. Just find the best funds for the lowest price and have them optimally allocated.) Fifth, do not withdraw any funds when you lose your job, have a health problem, get divorced, buy a house or send a kid to college. Sixth, time your retirement account withdrawals so the last cent is spent the day you die.

She forgot to add "make sure no random calamity occurs to you - make sure your house isn't lost in a wild fire, hurricane, earthquake, or tornado; make sure you are never in a disabling accident; make sure you never suffer from a disabling disease; you are never laid off through no fault of your own; etc., etc." Well, OK, number five sort of covers that, but really, it's the other side of the coin - most people will never have the resources to truly weather such events without dire and long-lasting consequences to their finances. Yet those to whom these chance disasters occur are routinely blamed for not being "prepared" for them.

Quote:
As we all know, these abilities are not common for our species. The current model for retirement savings, which forces individuals to figure out a plan for their retirement years, whether through a “guy” or by individual decision making, will always fall short. My friends are afraid, and they are not alone. In March, according to the Employee Benefit Research Institute, only 52 percent of Americans expressed confidence that they will be comfortable in retirement. Twenty years ago, that number was close to 75 percent.

I hope that fear can make us all get real. The coming retirement income security crisis is a shared problem; it is not caused by a set of isolated individual behaviors. My plan calls for a way out that would create guaranteed retirement accounts on top of Social Security. These accounts would be required, professionally managed, come with a guaranteed rate of return and pay out annuities. This is a sensible way to get people to prepare for the future. You don’t like mandates? Get real. Just as a voluntary Social Security system would have been a disaster, a voluntary retirement account plan is a disaster.

And you know damn well this will NEVER happen in the current US as it will be derided as a tax by its opponents.

Quote:
It is now more than 30 years since the 401(k)/Individual Retirement Account model appeared on the scene. This do-it-yourself pension system has failed. It has failed because it expects individuals without investment expertise to reap the same results as professional investors and money managers. What results would you expect if you were asked to pull your own teeth or do your own electrical wiring?

It was sold with the idea people would have more control over their own money. It appealed to the American sense of self-sufficiency and failure to acknowledge that few people are true renaissance men. Fact is, people are shaved, poo-flinging monkeys and most have about the same capacity for long-term planning as a chimp.

Fact is, there ARE people out there who'd rather pull their own teeth than go to a dentist, and re-wire their house rather than call and electrician, and likewise refuse to hire expert advice/help when appropriate, and when they do try to obtain professional help they are fucking clueless on how to research such people and often wind up scammed. People aren't good at this, at least the American variety aren't, but they refuse to admit it.

Quote:
Although humans may be bad at some behaviors, we are good at others, including coming together and finding common solutions that protect all of us from risk. Surely we can find a way to help people save — adequately and with little risk — for their old age.

Except that in modern America we suck at "coming together and finding common solutions that protect all of us from risk" because of the mindless worship of self-sufficiency, distrust of the educated, and all the bullshit propaganda since, oh, around 1980 if not earlier.

Can't wait until the Baby Boomers smack into Retirement Reality and realize they were sold a bill of goods. Well, I hope they realize they've been had, but these days I expect them to blame themselves and vote for more laws to punish "deadbeats".



Now I did a job. I got nothing but trouble since I did it, not to mention more than a few unkind words as regard to my character so let me make this abundantly clear. I do the job. And then I get paid. - Malcolm Reynolds, Captain of Serenity, which sums up my feelings regarding the lawsuit discussed here.

If a free society cannot help the many who are poor, it cannot save the few who are rich. - John F. Kennedy

Sam Vimes Theory of Economic Injustice

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 10:30am
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Scary shit Broomstick. A lot of these retirement income models are based on having to pay a monthly mortgage payment through retirement. Much of this lack of savings would be mitigated by not having to pay a monthly mortgage payment when you are retired. But between the perceived "need" to keep stepping up to a bigger fancier house, or the constant (not as much these past few years, but still) rolling of credit card, auto payment etc. debt into mortgages it's no wonder 70 year old retired former professionals still have mortgages. It is sad but do you know how many middle aged douchebags i've written home equity lines of credit or refinanced cash out mortgages for so they could buy fucking toys they thought they deserved?

Ass for the poo flinging monkey analogy, that's wrong. It is my professional opinion based on the better part of a decade in banking that most people are in fact locusts, not monkeys. They consume and consume until there is nothing more and then wonder what the fuck just happened.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 11:25am
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Yes, indeed, scary shit. At least I'm not expecting to have a mortgage when I'm 70 for the simple reason I don't expect to ever have a mortgage at all. While in theory "investing" in a home can be a positive in practice far too many wind up making it a negative. Near as I can tell, I am no worse off for renting because, while I don't have equity neither do I have a mass of debt.

But even though I do, at this moment, have more savings than I ever have before it's not nearly enough, and it's due to an inheritance so it really is a one-time windfall. I am one of the fortunate few in that I have an honest-to-god pension coming - assuming my former employer doesn't find a way to dick me out of it in the next 15-20 years. And really, at this point, a pension beats the hell out of a 401(k) on many levels because (as it currently stands) it's guaranteed monthly income for life (however long I live). I can't outlive my pension, but I could outlive my savings.

I have about 15-20 years left to prepare for retirement. Honestly, if I can I'll just keep working, even into my 90's, because a body needs something to do but realistically I'm going to have to slow down around 65-70, go to part-time, whatever. It's possible for the elderly to keep working. Currently, I have a co-worker in her 80's, and I knew someone who kept working up until 100, but you can't count on that as there is an element of luck there you can't control. If I plan for a "forced" retirement at 70 but it turns out I can keep going, well, no harm done, right? I'm just not sure what's possible between now and when I'm retirement age. Yes, I'll have a monthly income (pension + SS) but it would be survival-poverty. Nice to have at least that much of a floor, and I'm the sort that can find life pleasant even when poor, but I'd prefer something a little more upscale if possible. And all that depends on my staying relatively healthy - despite some good longevity genes from dad's side that can all go to shit in an instant due to either accident or illness.



Now I did a job. I got nothing but trouble since I did it, not to mention more than a few unkind words as regard to my character so let me make this abundantly clear. I do the job. And then I get paid. - Malcolm Reynolds, Captain of Serenity, which sums up my feelings regarding the lawsuit discussed here.

If a free society cannot help the many who are poor, it cannot save the few who are rich. - John F. Kennedy

Sam Vimes Theory of Economic Injustice

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 04:30pm
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*sighs* What happened to the day when a retired couple sold their house and bought a much easier to maintain little one-bedroom bungalow in a quaint seaside town where everything is in walking distance and they could take the grandkids to the beach when family visited? I strongly suspect the people who do that end up happier, anyway; they have less to worry about and less to maintain, and salt air is salubrious for the health. Of course I've already resolved not to take out a mortgage for more than 200k (as distinct from the overall price) so I'm not average. I know a lot of million-dollar basically regular family homes in housing developments around here, which still staggers me. Most of the people in this can't possibly have combined incomes higher than 100k.

You know, it really isn't an issue about just retirement. It's about the fact that our modern culture is devoted to and basically worships a concept of consumption so intense that people feel they have to spend more than they can afford.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 05:04pm
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The Duchess of Zeon wrote:
It's about the fact that our modern culture is devoted to and basically worships a concept of consumption so intense that people feel they have to spend more than they can afford.

This. I don't know whether to be contemptuous or sympathetic toward a family who's had a stable middle-class job for 50 years, with no major financial shocks, and only has $30,000 in their retirement account. On the one hand, at the moment, they are on the edge of destitution. On the other hand, fuck them -- they've chosen past consumption over present consumption. They made their bed; let them lie in it.

(Obviously this conflict between righteous anger and calculated utilitarianism does not apply to people who have been saving wisely and experienced a harsh financial shock.)



"... alas, too many people think consistency the hobgoblin of little minds." -Publius

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 05:31pm
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I'd also like to point out that this is a mark in favor of a broad consumption tax, like a VAT. One tried-and-true way to make people save is to make consumption hurt. There are other marks both for and against it --- it's regressive, for instance (although I don't think that should matter in the presence of a working safety net) --- but the fact that people aren't saving adequately speaks in favor of one.



"... alas, too many people think consistency the hobgoblin of little minds." -Publius

Daily Nugget of Wisdom from Goldman Sachs:
"I say 'keep the change' purely for my own convenience."

"A space shuttle on the back of an aircraft carrier in New York City is perhaps the most American thing you could have without the help of a deep fryer. I'm surprised anyone in the US opposes it." - Gandalf

WARNING: May become overexcited by mathematics or monetary policy.

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 05:44pm
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I personally dispense with both social security / national insurance (to the maximum extent legally possible) and conventional pension schemes, because the probability of bankrupt governments having to cut payouts of the former and the probability of the later being stolen by financial scammers both approach unity over the next few decades. Investments personally diversified across asset classes, brokers / trustees and international jurisdictions are the only sensible way to minimise this risk. I am in principle ok with you indulging in delusions of an all-powerful state being able to guarantee quality of life and elimination of risk for everyone by decree, as long as there is a simple personal finance exam (not to exceed one page or ten questions) which if passed exempts you from all payments and requirements. Of course you will not offer such an exam, because giving people that kind of choice is anithetical to socialism, regardless of whether they are qualified or not. You will simply try and take (even more of) everyone's money by force. That is when the modern international network of tax havens, non-profit trusts, tax-minimisation experts and deep tax efficiency strategies turns out to be a good thing after all.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 07:20pm
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The big problem with using a vat tax as a method to drive down consumption is that it... well, drives down consumption. That's one way to kill an economic recovery.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 07:48pm
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I'm talking about a VAT as a policy tool to improve long-run outcomes, so business cycles aren't relevant. But to indulge in this tangent, setting aside deadweight losses, a VAT just shifts consumption into investment. Income stays the same. A VAT [increase] would only kill an economic recovery if the central bank were stupid enough to target inflation without taking the VAT [increase] into account[, and that's a reason to change central bank policy, not tax policy]. (Oh wait, that's what the ECB is doing, isn't it? :lol:)

[edited in]



"... alas, too many people think consistency the hobgoblin of little minds." -Publius

Daily Nugget of Wisdom from Goldman Sachs:
"I say 'keep the change' purely for my own convenience."

"A space shuttle on the back of an aircraft carrier in New York City is perhaps the most American thing you could have without the help of a deep fryer. I'm surprised anyone in the US opposes it." - Gandalf

WARNING: May become overexcited by mathematics or monetary policy.


Last edited by Surlethe on 2012-07-22 11:30pm, edited 1 time in total.
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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-22 10:27pm
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Starglider wrote:
I personally dispense with both social security / national insurance (to the maximum extent legally possible) and conventional pension schemes, because the probability of bankrupt governments having to cut payouts of the former and the probability of the later being stolen by financial scammers both approach unity over the next few decades. Investments personally diversified across asset classes, brokers / trustees and international jurisdictions are the only sensible way to minimise this risk.



yeah, but that fails the 'most people are shit at investing wisely' that was discussed further up the thread.

Hell, I'm shit at investing wisely. No doubt I could spend a week or two doing so heavy research into how shares work, and trying to identify megatrends for long term investment, but it's really not a productive use of my time.

Dosen't the market dictate specialistation of labour?



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-23 03:47pm
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as long as there is a simple personal finance exam (not to exceed one page or ten questions) which if passed exempts you from all payments and requirements. Of course you will not offer such an exam, because giving people that kind of choice is anithetical to socialism
No, if you offer the choice you get so much idiots that study just enough to pass the exam and then forget everything and when the time comes they crash and burn. You end up having very few people paying the state to give pensions. Which means that instead of paying a ridicule sum below 10% they have to pay 40 or even 50% of their incomes in taxes just to allow those abovementioned idiots to crash and burn. None wins.

It makes the US look like a paradise.

I'm not against letting the smart ones fight for themselves, but really, most people is... too fucking dumb or too specialized to not totally suck balls in finance. The point is... if you make a good system that selects only the ones really able and willing to care for themselves financially while veryone else is under the State's wing, you don't change much.

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Dosen't the market dictate specialistation of labour?
There are people that offer the service.
The issue is that there is no guarantee that they are really working for you. Seems even that the higher you go in the bank/finance, the more are the chances to find a shark that rips you off for personal gain.

Theoretically a Evil Socialist state Satarglider hates so much was supposed to do this by "stealing from the rich", but nowadays it's much more fashionable to "steal from the poor and trow it at banks".



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-24 07:32am
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The Duchess of Zeon wrote:
*sighs* What happened to the day when a retired couple sold their house and bought a much easier to maintain little one-bedroom bungalow in a quaint seaside town where everything is in walking distance and they could take the grandkids to the beach when family visited? I strongly suspect the people who do that end up happier, anyway; they have less to worry about and less to maintain, and salt air is salubrious for the health.
If you already own your own home by the time you retire there's a bit less incentive to do so, but the point is well enough taken.

Assuming that the boomers and Gen-Xers have to solve this problem in self-defense and come up with something other than "work the Gen-Yers to death paying for it all," who knows? I might luck out and try exactly that. Personally I think that's not unlikely by the time people my age retire, if nothing else because it's the people in their forties and fifties who normally set the tone of society, not the people in their sixties and seventies. Numbers matter, but so does energy.

someone_else wrote:
I'm not against letting the smart ones fight for themselves, but really, most people is... too fucking dumb or too specialized to not totally suck balls in finance. The point is... if you make a good system that selects only the ones really able and willing to care for themselves financially while veryone else is under the State's wing, you don't change much.
Perhaps more to the point, if we were all this good at finance, we'd have to be so specialized at finance that most people wouldn't be good at anything else.

Hedge fund traders aren't the next stage in human evolution, any more than scientists, lawyers, or computer game designers are. All these types of specialists can only exist because everyone else is busy making and maintaining the stuff they need to live their lifestyle. The financial wizards don't build their own computers from raw ore; the people who do build them can't be financial wizards at the same time. Those are both separate, mutually exclusive full time jobs. Force everyone to be good at one in self-defense, and they'll stop doing the other competently.


So the weird self-parodic gloating about how wonderful the current system is for financial wizards and how the alternative is socialism makes me wonder... because that sounds inherently unstable. If being anything but a financier means starving and dying, or letting grandma starve and die, then the economy is going to starve and die in its own right.

Which, I suppose, is the point of the original article. Right now, we're using the stock market as our sole hope of survival for the elderly, because the alternative is ANTICHOICE SOCIALIST STEALING. But it is point blank not working- and we're going to end up having to pay for it one way or another, either in cash or in unnecessary dead grandparents.

You can blame the culture, but the culture is all one. Sure, there's this culture that made so many adults into consumption fiends and left us with no life savings. And that's the same culture that told us that Wall Street and the London Exchange are the compasses we should set our course by. Changing the culture of saving would mean changing the culture of stock-gambling, or changing the culture of autarkic individual finances.

Sneering at the people who didn't save offers temporary satisfaction, if you're the kind of person who's into that... but it doesn't make the problem go away.

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-24 10:02am
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I don't think Starglider is talking about Wall Street-grade financial expertise. I think he's talking about the sort of financial competence people should learn in high school (but don't).



"... alas, too many people think consistency the hobgoblin of little minds." -Publius

Daily Nugget of Wisdom from Goldman Sachs:
"I say 'keep the change' purely for my own convenience."

"A space shuttle on the back of an aircraft carrier in New York City is perhaps the most American thing you could have without the help of a deep fryer. I'm surprised anyone in the US opposes it." - Gandalf

WARNING: May become overexcited by mathematics or monetary policy.

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-24 10:19am
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Surlethe wrote:
I don't think Starglider is talking about Wall Street-grade financial expertise. I think he's talking about the sort of financial competence people should learn in high school (but don't).


Precisely. From my vantage point, the state of financial literacy among young adults is simply apalling. The financial decisions made between 18 and 24 (and the habits that develop) follow you for the rest of your life. Nobody is teaching these kids that.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-24 04:12pm
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Simon_Jester wrote:
Assuming that the boomers and Gen-Xers have to solve this problem in self-defense and come up with something other than "work the Gen-Yers to death paying for it all," who knows? I might luck out and try exactly that. Personally I think that's not unlikely by the time people my age retire, if nothing else because it's the people in their forties and fifties who normally set the tone of society, not the people in their sixties and seventies. Numbers matter, but so does energy.

And now you will post some evidence showing that meeting the pension/social security requirements of the past will require working Gen-Yers to death.

Hint: It doesn't.

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-24 11:32pm
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D.Turtle wrote:
And now you will post some evidence showing that meeting the pension/social security requirements of the past will require working Gen-Yers to death.

Hint: It doesn't.


Question: Are healthcare costs included as part of the pension/social security obligations?

If they aren't then we can jiggle the system a bit and everyone working right now can retire at 65-70 and get our pensions paid out without robbing our kids of a pension and working them to death. But if we include healthcare costs we're going to have some serious problems unless there are major reforms of the US healthcare system. The costs have been going up at about 7-8% per year for the last 30 odd years which is in excess of inflation and GDP growth. If something doesn't happen to put a stop to this trend it's going to get ugly.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-25 12:53pm
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Well, the obvious reason the trend won't continue is that in about 30 years health care spending would exceed annual income.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-25 02:35pm
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The easy solution of course would be to link both payout to CPI inflation and age of receipt to your average life expectancy at birth. Eliminate differing payments based on work history; everyone gets the same amount, which is thus guaranteed to provide the support for a modest lifestyle in seniors. People will have to work longer, but retiring before you're 70 unless you're physically disabled is an unreasonable expectation, and we have the ability to screen for physical disability. Combine this with the social security tax no longer being capped and the system will be able to have a reserve to meet major contingencies indefinitely.

I don't expect to retire until I'm past seventy, and I really doubt anyone in my generation does. The Baby boomers don't deserve the deal they've gotten, the problem is that the only game in town for changing it is not proposing sensible changes. I want a fixed amount pension for everyone, just enough to live off of and tied permanently to inflation in the consumer price index; and I want a flexible retirement age which provides for you in your dottage when you can't work, not gives you some kind of leisure lifestyle in your 50s and 60s.

Unfortunately the only game in town is "privatisation" and even if it worked somewhere else I am quite certain it would fail in the US.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-25 02:45pm
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aerius wrote:
Question: Are healthcare costs included as part of the pension/social security obligations?

Of course not. Because those costs are a result of a totally different dynamic in comparison to the social security obligations.
Quote:
If they aren't then we can jiggle the system a bit and everyone working right now can retire at 65-70 and get our pensions paid out without robbing our kids of a pension and working them to death.

Exactly.
Quote:
But if we include healthcare costs we're going to have some serious problems unless there are major reforms of the US healthcare system. The costs have been going up at about 7-8% per year for the last 30 odd years which is in excess of inflation and GDP growth. If something doesn't happen to put a stop to this trend it's going to get ugly.

Yes, health care costs are a major, major problem. However, this is not a result from the rising life expectancy (or to be more exact, that is only a minor reason). This suggests that (additional) reforms of the health care system are needed (the ACA already does quite a lot in order to bend the cost curve).

The Duchess of Zeon wrote:
The easy solution of course would be to link both payout to CPI inflation and age of receipt to your average life expectancy at birth. Eliminate differing payments based on work history; everyone gets the same amount, which is thus guaranteed to provide the support for a modest lifestyle in seniors. People will have to work longer, but retiring before you're 70 unless you're physically disabled is an unreasonable expectation, and we have the ability to screen for physical disability. Combine this with the social security tax no longer being capped and the system will be able to have a reserve to meet major contingencies indefinitely.

I don't expect to retire until I'm past seventy, and I really doubt anyone in my generation does. The Baby boomers don't deserve the deal they've gotten, the problem is that the only game in town for changing it is not proposing sensible changes. I want a fixed amount pension for everyone, just enough to live off of and tied permanently to inflation in the consumer price index; and I want a flexible retirement age which provides for you in your dottage when you can't work, not gives you some kind of leisure lifestyle in your 50s and 60s.

Unfortunately the only game in town is "privatisation" and even if it worked somewhere else I am quite certain it would fail in the US.

Actally, removing the cap on the social security tax would fix any shortfalls all on its own. Actually, it would leave the program with a large surplus (IIRC).

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-25 03:38pm
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Simon_Jester wrote:
But it is point blank not working- and we're going to end up having to pay for it one way or another, either in cash or in unnecessary dead grandparents
Which is where you find a major issue. If those grandparents have any offpsring AND such offspring does love them a bit, the burden of keeping them alive ends up on their family. Which repeats what happens in a (perfect) socialist state, just that the family rarely has so high income to keep elder alive without going homeless.
This means you are fucking everyone whose elder haven't been killed by "natural causes".
Dirty socialist grandparents stealing money from their offspring. :lol:

Surlethe wrote:
I don't think Starglider is talking about Wall Street-grade financial expertise. I think he's talking about the sort of financial competence people should learn in high school (but don't).
Most of my point stands. People will study enough to pass the exam and then live as locusts. The test should make sure they want to apply what they learned as well, otherwise it's pointless.

I know tons of people that know lots of information and procedures and can lecture you on that but in real life are dumb as a fleet of bricks and follow their cock/feelings/whatever instead.

The only way is to have some kind of statal or private infrastructure do the job for them.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-25 05:00pm
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D.Turtle wrote:
Actally, removing the cap on the social security tax would fix any shortfalls all on its own. Actually, it would leave the program with a large surplus (IIRC).



I want to force people to work longer, for one, and two, I want to use the money to provide guaranteed benefits, so that everyone regardless of work experience receives the exact same payout from Social Security.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-25 07:35pm
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Purely as a solution to insufficient pensions, or also as a social policy?

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-25 08:25pm
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Col. Crackpot wrote:
Surlethe wrote:
I don't think Starglider is talking about Wall Street-grade financial expertise. I think he's talking about the sort of financial competence people should learn in high school (but don't).
Precisely. From my vantage point, the state of financial literacy among young adults is simply apalling. The financial decisions made between 18 and 24 (and the habits that develop) follow you for the rest of your life. Nobody is teaching these kids that.
What's changed? How much better were things when you, or your parents or grandparents, were twenty?

How much of it might be due to warped incentives and systematic national delusions? For example, the love of college loans is definitely a national delusion thing- parents are signing off on them too, despite the obvious folly of racking up fifty thousand dollars of debt in your twenties.

D.Turtle wrote:
Simon_Jester wrote:
Assuming that the boomers and Gen-Xers have to solve this problem in self-defense and come up with something other than "work the Gen-Yers to death paying for it all," who knows? I might luck out and try exactly that. Personally I think that's not unlikely by the time people my age retire, if nothing else because it's the people in their forties and fifties who normally set the tone of society, not the people in their sixties and seventies. Numbers matter, but so does energy.
And now you will post some evidence showing that meeting the pension/social security requirements of the past will require working Gen-Yers to death.

Hint: It doesn't.
...What on Earth are you talking about?

Please reread my post; you seem to have missed some of the nuances in "assuming that [they] solve this problem... and come up with something other than [bad thing]." That's not the same as "[bad thing] is going to happen, I JUST KNOW IT."

The fiscal reality for me is that I have no idea what to expect in the way of retirement. None whatsoever. That's far beyond the horizon of what I can predict- the other side of peak oil, the other side of the death of the baby boomers and the retirement of Generation X, the other side of America either fixing its structural deficit or collapsing under it (we can maybe run at debt equal to 100% of GDP, but 200%? More?)

I'm a relatively young man. I expect a lot of things to change before I get into my mid-sixties, and I don't expect to predict them all in advance. Does that bother you somehow?

The Duchess of Zeon wrote:
The easy solution of course would be to link both payout to CPI inflation and age of receipt to your average life expectancy at birth. Eliminate differing payments based on work history; everyone gets the same amount, which is thus guaranteed to provide the support for a modest lifestyle in seniors. People will have to work longer, but retiring before you're 70 unless you're physically disabled is an unreasonable expectation, and we have the ability to screen for physical disability. Combine this with the social security tax no longer being capped and the system will be able to have a reserve to meet major contingencies indefinitely.
What about mental disability? I'm a bit more sensitive to this, since I know someone who just... collapsed to the point of being practically unemployable in their late middle age. Medication has not helped; early retirement might.

I've got family who keep chugging on in their seventies, and one who kept going in his eighties, but it's something I think about now. Being able to retire after 25-30 years and get at least part of a pension is... well. Let's just say that I think I'm going to stay in favor of it under unusual conditions.

Hell, I can think of at least one celebrity who's beginning to suffer seriously from the effects of Alzheimer's at sixty-four. By seventy he might well be unemployable and/or dead.

Not everyone ages gracefully, either from the neck down or the neck up.

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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-25 08:57pm
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Simon_Jester wrote:
Col. Crackpot wrote:
Surlethe wrote:
I don't think Starglider is talking about Wall Street-grade financial expertise. I think he's talking about the sort of financial competence people should learn in high school (but don't).
Precisely. From my vantage point, the state of financial literacy among young adults is simply apalling. The financial decisions made between 18 and 24 (and the habits that develop) follow you for the rest of your life. Nobody is teaching these kids that.
What's changed? How much better were things when you, or your parents or grandparents, were twenty?


Not to wax poetic with a good old days fallacy but my parents generation could get meaningful employment right out of high school in manufacturing or vocational trades. Compound that with the fact that the complexity of the financial system has changed. Example: 30 years ago you cashed your check and paid your bills.Your spending budget was in your wallet. Today you miscalculate your checking account balance and that cup of coffee costs you thirty bucks, and that's if it doesn't snowball out of control. A cursory glance of my chargeoff portfolio tells you just how many people make the mistake of saying fuck it and walk away from it... or from a credit card... or from a student loan and that has drastic consequences. And they are so young and it frustrates me so much. So to answer your question, what has changed is that it is much easier to fall off a financial cliff at an early age because of a bad decision or two. We as a society owe the next generation some guidance on how to avoid that cliff.



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 Post subject: Re: Our Ridiculous Approach to Retirement (US Stupidity) PostPosted: 2012-07-25 09:32pm
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Col. Crackpot wrote:
Not to wax poetic with a good old days fallacy but my parents generation could get meaningful employment right out of high school in manufacturing or vocational trades. Compound that with the fact that the complexity of the financial system has changed...
I kind of agree with this. I don't mind that it got more complicated as such.

What really bothers me is that the people now falling off cliffs didn't get a vote about how the system would be made more complicated. All the decisions that led to the world being the way it is were made under an economic and social order that seemed pretty sweet to the people running it in the '80s and '90s... and now everyone is paying for it. But it's particularly problematic for the people who didn't spend decades learning how to function in the current system and building up contacts and resources to help them survive, and are now being thrown in and told to sink or swim.

I've done pretty damn well surviving that so far, I think: I have some savings left, and pretty good job prospects personally as long as I don't screw up royally in my new line of work. But a lot of people my age and a bit younger aren't managing and can't manage, and it bothers me.


Also, the trend in society for about 30-40 years has been pointing toward more 'free range' approach to adolescence: you are expected to learn adult skills on your own. The environment lets you avoid acquiring them longer without consequence (college is great for that), but it won't make you get them during that grace period. Schools will not teach them to you, and parents have to figure out for themselves that you need them- even if they didn't need them the same way thirty years ago, like you just said.

Remember driver's ed courses in high school? I don't. Why should financial ed be any different?


Traditionally, each generation goes on gradually gaining wisdom, wealth, and responsibility until they can run the system safely. This generation is going to experience a very rough and slow transition before that can happen, because right now they're mostly poor and out of the loop politically, even more so than the under-thirties of, say, the 1960s and 70s. I expect considerable upheaval to come from that.

This is part of what makes me paranoid and twitchy when the subject of my own retirement comes up. I don't know what's going to happen in 2025 or 2030, and seeing the "Surprise! Fuck You!" Act pass for some bizarre reason wouldn't surprise me.

[EDIT: Random chunk of quote-text I never really wanted to address but left by accident removed]


Last edited by Simon_Jester on 2012-07-26 07:46am, edited 1 time in total.
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