Here we go again...

ED 3000 Posted By ED 3000, Mar 6, 2018 at 8:29 PM

  1. Ashful

    Ashful
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    Pensions should be killed, they’re nothing but a corporate time bomb, which have dragged down and killed many great American institutions. The 401k and IRAs are both great mechanisms, giving anyone who chooses to take responsibility for themselves an excellent means to do so.

    SS has become exactly what was predicted. How could it have gone any other way?

    Save for yourself, folks. American independence works both ways.
     
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  2. jharkin

    jharkin
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    Let me fix that for you. They WOULD be great mechanisms if Americans had even the most rudimentary of financial education to know how to use them . But they dont.... And many plans are a mess filled with horrible active funds that underperform and have ridiculously high fees... typically because the corporate sponsor just doesn't care and with picks the cheapest (to the administrator) options or has some flunky in HR with no financial training managing the thing.

    Even the guy who invented the 401k has since admitted he created a monster:
    https://www.cbsnews.com/news/401k-founder-my-creation-is-a-monster/


    I am *lucky* in that my 401k has a bunch of Vanguard institutional class index funds with competitive fees... and I know enough to pick those and to max it out. The statistics say the majority of people have garbage plans and dont use them. Plans without mandatory enrollment have something like 50-60% enrollment rates and average deferrals are a pathetic 6%. A majority of participants dont even take the full employer match offered <>

    Its easy to fall into the trap of bubble thinking - since these concepts come so easy to us, and we have got so lucky in this recent bull market that everyone else should be just as successful. But its not that simple. Not everyone has the options we do. In fact the majority do not.

    In their heyday pensions worked because they recognized that financial planning takes expertise that the average person doesn't have, and risks are more easily mitigated when spread over a large group (same concept as insurance). Prime example - to this day CALPERS is probably one of the most effective retirement vehicles in existence because of their scale and the fact they have an activist board that actually fights for the interests of their participants and negotiates low costs.

    As individuals all fighting alone we have none of those advantages....
     
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  3. jharkin

    jharkin
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    Interesting question.... I see all ages, but now that you mention it I think you are right that the loudest complainers tend to be people my age and mostly younger... i.e 30s and early 40s with young families. Especially the hi tech professionals that live in the big McMansion developments full of the 5000sq ft palaces. Those types seem to be the people who never realize you can get questions answered by using a ... telephone....

    Same folks who every week will come on asking "is town hall open today"


    Did you think to call )$*(#$)(#*$ ?
     
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  4. Ashful

    Ashful
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    You make some good points, but this is where you go wrong. There is no excuse, in today’s world of free information, for any individual to not have access to educate themselves adequately in this area. It’s just a matter of making the time and putting forth the effort to do it. Heck, you can become a more educated investor than me with a few evenings on YouTube, chasing the right video lecture trails. Unfortunately, too many would rather spend that time watching the Kardashians.

    In an ideally capitalist environment, not everyone can rise to the top of the available opportunities, but anyone can. That is the difference in our underlying perspectives, “everyone” versus “anyone”.

    It’s all good. We can all learn something from our differences in opinion.
     
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  5. jharkin

    jharkin
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    There is a difference between "can" and "will" We have to recognize when the real world is not the ideal world and plan accordingly. Yes there are people who abuse the system, live beyond their means, run up irresponsible spending on credit cards.... But the financial system is designed to prey on these people and they use every psychological trick in the book to encourage this bad behavior because somebody is profiting off it.

    Yes we can say its all their own fault... but that is little consolation when millions of households become impoverished retirees and then we all have to pay to pickup the pieces in the form of medicad, welfare, etc.


    It also ignores all the structural advantages built in to the system that help the wealthy stay wealthy and made it hard for average folks to join those ranks. Advantages that most people who benefit from dont even realize they are. (tax breaks, preferential credit terms, acess to better investment vehicles and cheaper financial advice, career opportunities, and so on)

    I may be more sensitive than average to this because I grew up in a blue collar household and remember my mom driving around in an old junker running on 3 cylinders and buying bread with quarters... unplugging the phone so we wouldn't get harrased by creditors... I worked my way into a professional class lifestyle (I wont disingenuously claim I am "middle class" - because income statistics clearly say I'm not). I am acutely aware of how easy it is to fall "off the wagon" after even a minor life disruption like a short term job loss, illness, disability - and how fast you can dig yourself into a hole that's practically impossible to dig out of even if you try your best.

    I spend a lot of time on a finance board full of (self selected community) people who make high 6 to even 7 figure incomes, and where raised in households that made just as much... so to them it seems so effortless they think anyone who doesn't have it as good.... just isnt trying.



    I imagine we will have to agree to disagree on this point, as we often do my friend. I dont take it personal, I am not angry, and as always I enjoy and learn from our debates... but I do have very passionate feelings on this.
    Cheers.
     
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  6. ED 3000

    ED 3000
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    Our outhouse is still standing. Don't use it for it's original purpose, now we use it as a smokehouse.

    Just kidding. I do have some kindling stored in it though.
     
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  7. Ashful

    Ashful
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    Definitely, which is why I never mind having these debates with you. There are many others, where these subjects always devolve into unnecessary name-calling and accusations. There's no need for that.

    Also, our backgrounds are not as different as you might assume.

    I've been toying with the idea of building one, myself.
     
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  8. Knots

    Knots
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    I reckon there's a mix of those prepared and those not, but those who aren't make the most noise.

    It's 19F here this morning. Supposed to get a few inches Tuesday. I'm going snowshoeing today (lemons/lemonade).

    It's worth reading this book and asking yourself how it would play out today. This hurricane was worse than Katrina. They had to re-do the maps of CT, NY (L.I.), and RI after this storm. It set off the seismographs in Alaska when it hit. My father was 11 and living in western CT (where it wasn't as bad) and remembers it clearly and how bad it was.

    It took down so many trees in New England that the government marked them and sunk them in lakes to preserve them for future use.

    A friend of mine dives in a local lake here quite a bit to help mitigate the invasive weed infestation. He found what I assume to be one of the 1938 logs last summer.
    SuddenSea.jpg 1938HurricaneWood.JPG
     
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  9. begreen

    begreen
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    Looks like a good read. I just ordered it through our library.
     
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  10. jharkin

    jharkin
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    Oh I am sure... I'm more talking about some of the folks I spar with on bogleheads who make high 6 figure salaries in medicine or law and had parents just as well off who bought them their first house, etc. Those types sometimes just dont realize how non-typical they are.
     
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  11. rowerwet

    rowerwet
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    Heavy wet snow is the worst thing for a two stage snow blower. Spray down the second stage impeller and inside of the second stage and shoot with Spray silicone, and recoat often to allow the snow blower to keep lugging through.
    I bought a single stage cheapo from wallyworld for exaclty this kind of lousy wet snow, It lugs and stalls, but restarts and clears easily, Once the first pass has been made, I take it one half to one third of the width at a time to open up the driveway and sidewalks.
    Best part was finding the single stage really marked down because the plastic fairing was cracked. I don't care about plastic fairings, would rip them off if they got in the way, the snow blower works just fine, even in snow deeper than it is.

    We had the same level of whining and carping about the lack of power, spoiled food, no power, no phone, no cable in the Haverhill, MA area.
    Even the mayor of Haverhill got in on the act, dumping on national Grid because they had more crews outside of the city than in it. The big problem was a transformer station in the next town that got taken out by some huge trees, so duh, more crews would be there than in Haverhill.
    I can't believe nobody thought to pack their food in the snow! I have a generator, but even if I didn't, I have a power inverter that I can hook directly to batter in my car and at least power the refrigerator with the car idling.

    One of the members of my church also had no power, she kept a pot of water boiling on the stove and placed buckets of hot water in each room to keep them from being freezing. (she kept the windows cracked to avoid a build up of CO)
    She lives in the area with city gas and water, but even if you have none of that, most people have a gas grill and can boil snow on it, then bring the hot water into the house to keep it from freezing.
    We used the gas water heater to fill the tub during the ice storm the first year we were here, and had no firewood for the stove, it kept the house bearable until I could scrounge up some firewood the next morning.

    I suggested these tips on the local Facebook page, and couldn't believe that nobody else thought of them...

    So far I've gotten three trailer loads of firewod, mostly from trees down blocking the roads, same thing I did back in the October storm, the best part is, I don't have to drive around and look, just post on Facebook, and people tell me where the trees are down. Planning on heading out again tomorrow for another couple of loads.
     
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  12. rowerwet

    rowerwet
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    As for the SS, pension, 401k debate, I have an IRA and a 401k, I take the match from my employer, and wish all the money drained from my check each week for SS was going into my own acounts. I know exactly what is in my accounts, and what is happening with each of them.
    I know that my SS money is being pissed away, with some going to people currently collecting, some going to people who never paid in themselves, and the rest getting dumped into the US govt general fund and mostly squandered.

    FDR planned on SS being a stepping stone to a better system, but as we all know, there is nothing as permanent as a temporary government program...
     
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  13. jharkin

    jharkin
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    ;sick


    NO, sorry, but that's NOT how it works.

    Lots of disinformation is spewed about SS by groups that want to kill it off. And they want to kill it off because they are proposing more IRA like investing vehicles as the replacement which just put more money into the pockets of investment banks (in the form of fees and commisions).

    The nice thing is that the full explanation on how it really DOES work is spelled out nicely on ssa.gov and in a wikipedia article as long a short novel - for anyone interested enough to read it.

    SS is not a savings account. Its also not a retirement "fund" or an investment. The "retirement "portion is official SS OASDI - which stands for "Old Age Survivors and Disability Insurance" The insurance part is key - its meant as an insurance policy against living so long that you outlast your savings. It was never meant to be anyone's sole support in retirement, but rather be a backstop to prevent the specter of mass elderly living in homeless shelters after massive market crashes like the great depression.

    SS functions like an inflation indexed annuity - which is an insurance product. No matter how long you live the payments never stop, and they rise with the cost of living - so unlike savings vehicles like 401ks and IRA the income stream can never run out (talking from in individual retirees perspective here - not a commentary on the solvency of the system). It works somewhat like a pension, or more specifically like a SPIA annuity if you wanted to buy one privately. It provides this "insurance against old age risk" the same way homeowners insures against fire - by pooling all of our risk together to moderate the average cost. Some people will die young and never get what they paid in. Others will live to 100 and get back more than they paid. A few will even live right to the actuarial table age of 80ish and get back what exactly what they put in.

    The alternative is that everyone is on his/her own and then we each have to individually plan for the worst case... Which means lots of people will over save. Which drives down consumer spending. And since consumer spending is the engine that powers the economy.. economic slowdown is the result. the problem is far too few people think that through because the "the gooberment is stealing my money" soundbyte feels good to folks who want a skapegoat to blame.


    So how does it work?

    https://en.wikipedia.org/wiki/Social_Security_(United_States)

    Social security is a tax funded insurance plan. Current tax receipts go to pay current benefits first, and any surplus accumulates in the trust fund. If/When the time comes that payments exceed tax revenue then they start drawing down the trust fund. Once the trust fund depletes then benefits will have to be cut. Today this point is estimated to be around 2036. Contrary to right wing scare mongering the cause is not mismanagement - its demographics. When SS was created in the 30s the average life expectancy was under 60 - so most people would only ever draw SS for 3-5 years if they got it at all. Today that number is over 80 and people are drawing SS 15-20 years on average. Also the ratio of workers to retirees has radically shifted, its was over 150:1 at inception and has dropped to less than 3:1 today.

    This can all be addressed by program changes, just like it was in the 80s when they started taxing benefits. We just need the political will to adjust eligibility ages or increase the FICA tax rate.

    https://www.ssa.gov/news/press/factsheets/WhatAreTheTrust.htm

    The other common piece of disinformation is the claim that social security taxes are "put into the general fund and spent" This is just plain not true. Excess FICA tax receipts are put into the trust fund, and by law the trust fund is required to be "invested" and earn some return - but there are legal restrictions on what it can be invested in. So its invested in special treasury bonds. This buying of treasures makes cash available for general spending, which is the technicality used for this claim. However the fund can redeem those treasury bills at any time to get the funds back.
     
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  14. Ashful

    Ashful
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    Excellent post, jharkin. This is all correct, as far as I can see. When folks talk about Social Security being “raided”, if they actually know what they are talking about, it is discussion of the usage of the money transferred from SS into those Treasury bonds. There is (currently) a legal obligation for these to be redeemed as required, although Obama flat out stated this would cease in conjunction with the threatened 2011 government shutdown.

    But to what is the money being applied in the meantime? That is where the claims of “SS raids” hold a little (albeit, indirect) merit.

    Not that I’m implying there is a better system. It should not be left to appointed officials to invest this money in the free market, corruption would be inevitable. Putting this election of fund distribution back into the hands of the taxpayers would defeat the purpose of having such system. So, Treasury bonds it is. There is still enormous opportunity for corruption in the use of those funds, but it may be as limited as can be, any time you’re talking about sharks circling a pool of $2.6 billion.
     
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  15. rowerwet

    rowerwet
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    "buyingof treasures makes cash available for general spending, which is the technicality used for this claim. However the fund can redeem those treasury bills at any time to get the funds back."
    Do you believe in Unicorns to?
    We borrow about a third of what is spent every day in DC, the moment the SS becomes a liability instead of a revenue source, the whole ponzi scheme implodes.
     
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  16. Seasoned Oak

    Seasoned Oak
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    Ill soon be signing up for my paltry sum SS at 62 after working for 48 years. All I can say is I'm glad I planned for retirement a long time ago by investing in income producing ventures,as I could not attempt to live on what ill collect monthly. The scary thing is so many millions will have NO other income and will have to live on social programs to survive. Perhaps for decades. Looks like the perfect storm of Debt, low birthrates and Baby boomer retirement up ahead.
     
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  17. begreen

    begreen
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    I thought this thread about the weather. I can't remember a time when there were 3 back to back Nor'eaters. Can anyone? Hoping that all are well prepared this time and that this is the end of winter back east.
     
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  18. Seasoned Oak

    Seasoned Oak
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    All 3 are Duds in this area. Too far from the coast.
     
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  19. Knots

    Knots
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    It's just starting here. The wind is picking up. Supposed to get just shy of 2 feet.

    March has always been wholly unpredictable in New England. Sometimes it's just another February, and sometimes it is spring. About all that can be counted on is wind. An April fools snowstorm can never be discounted.

    The blizzard of 1888 was during this week of March. The snow didn't melt on New Haven Green until July. It's unlikely I'll see a blizzard like that in my lifetime, but I'm prepped for it if necessary.

    I'm reading about the spring of 1927 right now. Illinois got 2 feet of rain in 3 months. Missouri got 3 feet. From one side of the country to the other it rained. The Connecticut River left its banks. The Mississippi flooded much worse than the 1993 flooding. Major League baseball had the latest snow-out in it's history in Detroit on May 14th. A tornado 50 feet across at the base touched down in Washington DC and uprooted trees on Rhode Island Avenue.

    The weather we're having here right now is a minor inconvenience.
     
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  20. jharkin

    jharkin
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    Repeating a baseless claim over and over again wont make it true. We have been borrowing money since before you, or I or our parents, where born. Macro economics are a LOT more complicated than your home budget, and people smarter than me with degrees in this field have explained to me that the same rules we live by just dont apply when you are the one printing hte money ;)

    The SS system does have issues that need fixing no doubt. And we have a fine tradition in this county of putting off a small problem until it becomes a huge one later only to deal with it just before falling off the cliff... But when the time comes when it it happens, society will find the will to fix it (probably though raising taxes).

    The alternative is politically unthinkable. Just turning it off would leave millions of people who already worked their entire careers counting on it left out in the cold with nothing. This country simply wont do that. Or if it does its because things have gotten so truly bad (i.e. black swan event) we have bigger problems to deal with.



    Anyway back to weather.... Things wehre looking rough here this morning but amazingly hte lights have stayed on. fingers crossed.
     
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  21. Ashful

    Ashful
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    We were supposed to get two solid days of rain/snow/rain/sleet/rain/snow mix, but it ended after just 18 hours. Not complaining. It’s nice to miss out on the fun, for once, after the last two weeks of weather.
     
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  22. Knots

    Knots
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    Looks like we're about at the halfway point here. Luckily the snow is fluffy and the wind isn't too bad.
     
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  23. mass_burner

    mass_burner
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    Just got done first round snow thrower, heavy, wet 4-5 ", 12-15 to go, if talking heads right.

    Sent from my SCH-I535 using Tapatalk
     
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  24. Knots

    Knots
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    Mar 13, 2013
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    Still snowing a little. With the wind it's tough to tell how much we got. I'll say this - I may have to exit via a window since it doesn't look like I'll be able to open any of the doors...

    A little bummed by the forecast that shows a return to cold temps after this is over. There's gonna be some serious pent-up spring fever around these parts.
     
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  25. firefighterjake

    firefighterjake
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    HehHeh . . . don't tell my wife, but I'm kinda liking this last hurrah of winter as I still haven't quite got my fill of snowmobiling yet. My wife is not a fan of winter weather though so I keep telling her not to worry since snow that comes this late melts off quick . . . hopefully not too quickly though.
     
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