# 65 % of americans not preparing for retirement.



## Seasoned Oak

https://www.cnbc.com/2018/03/15/bankrate-65-percent-of-americans-save-little-or-nothing.html.

This is a topic that deserves discussion and was mentioned in another unrelated thread ,so I thought id start a thread on it. It does NOT need to be political in nature. I see this headline every year.
I find it ALARMING!!  So it seems we are OK with 65% of the population living out their last years on social services.Since it gets so little discussion and I don't see much in the way of fixes discussed. I think SS is a forced insurance/savings program, a very necessary one as most americans it appears need to be FORCED to save for retirement. Would be nice to be able to opt out but if that were allowed many of the biggest contributors would leave. What say YOU?


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## EatenByLimestone

If that net wasn't there, would people save?


There has to be some result to the keeping up with the jonses culture we have.    New car, vs retirement in 30 years...


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## Seasoned Oak

EatenByLimestone said:


> If that net wasn't there, would people save?
> There has to be some result to the keeping up with the jonses culture we have.    New car, vs retirement in 30 years...


The "net" isn't going away so may as well plan accordingly.
Since a large chunk of the public is "taken care of " in one way or another eventually by the Govt.,there should be a contribution system that also includes everyone. SS contribution systems leave out a huge pool of potential donors that pay nothing (or very little) into it. Like a consumption tax, since were all consumers. Can be tweaked to be very fair to all. Also can be very small since its broad based. Only problem I see is the fund possible getting raided(spent) instead of invested once again.


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## Alpine1

No less than 30% of my monthly wage is spent in retirement saving, work accident insurance and healthcare. It’s compulsory here, I’m taxed BEFORE I get paid. When I was young, I thought it was a legalized robbery of my earnings. Now that I’m older and a little wiser, I’m glad I saved enough for my retirement, that healthcare is almost free and so on.
This is a tough topic anyway.


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## Seasoned Oak

Alpine1 said:


> No less than 30% of my monthly wage is spent in retirement saving, work accident insurance and healthcare. .


That's a pretty good deal. I  doubt if that would cover Healthcare alone here. My Health insurance (2 people) is $30K a year alone.


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## Dantheman300z

This is an interesting thread, and look forward to more opinions.


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## EatenByLimestone

I noticed they don't give any info about the ages of those polled.  Depending on how established they are, the results could easily be skewed.  Poll a bunch of people in their 20s, and I'd be shocked if 5% could afford to save 10%, much less 20%.

Poll 40 year olds, I bet those numbers change drasticly.


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## Highbeam

I believe the American ss system should remain the way it is. Minor tweaks to maintain the status quo. It is a small defined benefit pension and NOT some sort of emergency welfare safety net. This pension was always meant to be barely adequate and for most Americans it is. Consider ss as the first income stream.

Those of us discussing this on an Internet forum are thankfully above average. I see the problem is a savings rate problem. Savings rate takes into account stupid high spending and stupid low saving. I am teaching my kids to  aim for 50% of net.

I am hopeful that we can get healthcare figured out with the next administration. Even a stable Obamacare is better than a wildcard.


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## peakbagger

Folks like to fondly remember defined benefit pension plans and think they were a panacea for all the current issues. It wasnt and was fundamentally flawed. For everyone who made it to retirement there was a large number of folks that never made it. Unlike IRAs they weren't portable, folks were stuck working for the same company for their entire career even if they hated the work as the plans were loaded to reward longevity. Contrary to popular belief the plans were not funded from past contributions by the company, the vast majority of the payouts for current retirees were from current profits. Fine if the company was growing and the the number of retirees was low compared to the employee base companies muddled through. It wasnt until after a string of high profile plans going bust that the government created the Pension Benefit Guarantee Corp to backstop the plans and required companies to meet reserve requirements. Unfortunately business had a lot of friends in congress and they were allowed to set unreasonably high investments returns to justify keeping low reserves. The result were companies decided defined benefit plans are a liability and have been dumping them on PBGC generally vastly underfunded so the whole defined benefit option is going belly up. 

There is a fundamental disconnect that politicians are unwilling to admit is that the system cant function with the population living longer than they worked. There were successful attempts to put in the current graduated retirement age but they didnt keep going. The maximum SS income rate also wasnt indexed as much as it needed. Given that the economy has shifted to capital gains based income the government should have been charged SS taxes on it. Frequent stock trading, could easily be surcharged which would slow down volatility on wall street and raise a lot of revenue. When I was growing up most folks were pretty well worn out by 62 and most didnt make it to age 70. Their pensions werent indexed for inflation and after six or 7 years this lack of indexing really cut into their retirement income even if they were alive. Folks are far more healthy these days as a whole and the SS retirement age has to go continue to go up gradually. If someone wants to retire early they have the option they just need to save more voluntarily.   

Both parties have elected to kick the can down the road but the conservatives have been working for years on the "nuclear" option which is "starve the beast". Basically starve the government for cash by cutting revenues from taxes and starving the IRS from resources to collect. At some point very soon the choice will need to be made between the young and the old to cut the social contract to keep basic services running. The only reason the government is functioning currently is China and the rest of the world is buying our bonds and the interest rates are low enough that the interest payments are killing the US. The latest tax cut is just the latest version of this and already the conservatives are screaming that the deficit they voted for will mean that big cuts in entitlements have to be made. 

I know a lot of folks who much rather would buy the new SUV, the camp on the lake and the big vacations every year then voluntarily fund their future. I see the ads for free seminars on how to hide assets of the elderly, so they can get free ride from medicaid. I also have known several folks who deliberately abused their parents by transferring assets and then doing what they had to keep the parents at home until the 5 year clock stopped ticking to claw back assets and then they dumped them in the system. They tend to be the ones who yell the loudest about lost entitlements.   

I was lucky my dad did investing as a hobby and was ahead of the curve on a lot of the current options, Our family was what would be called lower middle income, my dad worked full time plus did a did a side job a couple nights week and as soon as we us kids didnt need babysitters my mom worked night shift, yet he managed to save up enough for a comfortable retirement.  When I was growing up I got to watch Wall Street week with Lou Rukeyser. I didnt understand it all, but learned enough.  He was doing deferred compensation long before that option was called an IRA. I figured out pretty quickly that SS is basically welfare, its not there to be a comfortable retirement its there to provide the bare minimum so someone doesn't starve. I didnt plan on it being there when I retire and it still may not be at my full retirement age (7 years from now if I want to work that long). If I had to stop working on Monday I could live comfortably until age 70 before I file for SS and even then I could live without it.

As soon as I was earning enough money and worked for firms that would let me do 401Ks, I did so. I also did IRAs and when Roth's came out I switched to them. When the government opened up the options for IRA re characterizations, I took advantage of them and once I had access to Roth 401s,  I switched over to them. I am far better off with the current system then in the old days. I have switched jobs both voluntarily and involuntarily and in the majority I have had access to IRAs, so to carry the plans with me The one company I worked for that had pension plan for a few years shut down the plan and it ended up a the PBGC. In theory I might get $300 a month when I turn 70. A similar stint at a company prior to that one where I earned far less with a 401K and a company match is now worth 70K. I could buy a 12 year deferred annuity with that 70 K today and it would generate more than $300 a month 12 years from now.


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## Prof

I agree that much of the problem is "keeping up with the Jones" mentality. I have a choice when I go to buy a truck--spend 10-20K on a used one or 40K on a new one. As a society, we have become too comfortable with debt. On my way to work I sometimes listen to Dave Ramsey--kinda turned me on to a no debt lifestyle. I do have a mortgage, but I am aggressively paying this down. When it is time to buy something, I decide on what to get by how much cash I can put on the barrel. Often my kids here "no" when they want something that isn't in the budget--but they have college savings accounts. I spend plenty of money and have some nice things, but my decisions are not dictated by society. Heck, the Honda CRV I drive to work has zip ties holding the bumper together--my coworkers make fun of me and my wife asks every so often when we will get a new car. It really depends on when the Honda stops running, not what it looks like.


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## EatenByLimestone

Don't buy an annuity.  They're horrible ideas, unless you're the one selling it.


If only Bush was able to privatize the 3% (I think that was the number.)of contributions he wanted to with social security.  The market has done nicely.  

I'm not sure what ss will look like if I live to retirement.  Individual savings and propor planning, as far as I'm concerned, is the closest one can come to security in retirement.


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## EatenByLimestone

Prof, my truck is a beater too.  I was recently asked the color, I replied, starting to resemble rust.  Lol


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## begreen

Seasoned Oak said:


> That's a pretty good deal. I  doubt if that would cover Healthcare alone here. My Health insurance (2 people) is $30K a year alone.


Why is it so high? I never spent that much for a family of 4. Not even close.


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## Dantheman300z

Ditto begreen's question.


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## MikeK

EatenByLimestone said:


> I noticed they don't give any info about the ages of those polled.  Depending on how established they are, the results could easily be skewed.  Poll a bunch of people in their 20s, and I'd be shocked if 5% could afford to save 10%, much less 20%.
> 
> Poll 40 year olds, I bet those numbers change drasticly.



I kick myself for not saving when I was younger.  In my early 20's I worked a lot of hours and made 20k per year, but really my expenses were minimal. Even if it was a very small amount I would have been way ahead.  Unfortunately I was very ignorant.  The only way I knew to save then was to put it in savings in the bank, not checking.  That would have been a start.  I hope I can teach my kids to do better.

My car is 2001 Honda Civic.  Great little car, gets 37 mpg or better, but had been in some benders before I got it.  Has new tires, is maintained, and I hope it gets me many more trips to work.  

There is definitely some good info on retirement saving out there.  I really like Dave Ramsey's baby steps.  I really think he nails it.  If I had known them at 18 I would have been leap years ahead of where I am now.  Thank goodness I learned, although slowly.  

I also think it would help to teach these personal financial basics in high school.  Another thing that could be included in such a class would be the basics about health insurance options, what the terms are, shopping for a plan, etc.


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## RobbieB

I planned all my life and retired at 59 four years ago.

Save early and save often -


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## Seasoned Oak

begreen said:


> Why is it so high? I never spent that much for a family of 4. Not even close.


I guess its risk related. Mine is 50% higher than my wifes, probably because I had a heart attack and wear a leg brace. And also because they can.
Just a few years back before we were forced it carry insurance it was 10% of the price today. For many years I paid for my own HC expenses out of pocket. I don't see the genie going back in the bottle any time soon .The same company that owns the local Health Insuance company owns all the hospitals and clinics too.


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## Highbeam

MikeK said:


> I kick myself for not saving when I was younger.  In my early 20's I worked a lot of hours and made 20k per year, but really my expenses were minimal. Even if it was a very small amount I would have been way ahead.  Unfortunately I was very ignorant.  The only way I knew to save then was to put it in savings in the bank, not checking.  That would have been a start.  I hope I can teach my kids to do better.
> 
> My car is 2001 Honda Civic.  Great little car, gets 37 mpg or better, but had been in some benders before I got it.  Has new tires, is maintained, and I hope it gets me many more trips to work.
> 
> There is definitely some good info on retirement saving out there.  I really like Dave Ramsey's baby steps.  I really think he nails it.  If I had known them at 18 I would have been leap years ahead of where I am now.  Thank goodness I learned, although slowly.
> 
> I also think it would help to teach these personal financial basics in high school.  Another thing that could be included in such a class would be the basics about health insurance options, what the terms are, shopping for a plan, etc.



Anything that they would have taught us about health care back in high school would be totally useless now. Heck, they tried to tell us to eat margarine too! If they taught something as simple as compound interest (both ways, assets and liabilities) it would really help. 

Dave Ramsey is good for beginners but mr money moustache is where the real stuff is.


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## Seasoned Oak

Prof said:


> As a society, we have become too comfortable with debt.


I guess the general population is looking to the Federal Govt as a role model with this issue. I'm adverse to debt ,once deep in debt now about debt free. I'm not sure its the right decision for me, but since I have young children and a fairly young wife I dont want them to struggle if I check out early so I'm leaving them with assets instead of debts. Also it so much less stress and nice not to pay interest for anything anymore. It used to be thousands a month for interest alone. Id rather buy assets with that money or enjoy life with it.


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## begreen

I concur. This book should be required reading for all high school seniors -
https://www.amazon.com/dp/0140167153/?tag=hearthamazon-20


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## peakbagger

The vast majority of folks I run into are clueless on financial planning and management in the short term and long term. Some of them got roped in Edward Jones and dont realize that their good friend the agent, makes money every time they convince their client to buy and sell. Its better than nothing but sure isn't the ideal.  The schools skipped financial planning and in most families "dad" handled it. Even in my family I am the only offspring that really actively manages their money. 

Many folks think buying lottery tickets is financial planning .


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## Seasoned Oak

peakbagger said:


> Many folks think buying lottery tickets is financial planning .


 Those folks are all around me. Probably a part of the 65%ers.
I only know a handful of people who are really sharp with their finances. Not to say many don't earn a big salary ,they just don't hold on to any of it. My BIL earns an avg salary but id say he is worth well over 1m in financial assets. His unearned income long ago surpassed his salary at work.


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## Dantheman300z

What do you mean by unearned income long ago?


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## EatenByLimestone

I'd imagine he's talking about income derived from sources other than his job.  For instance, dividend income.


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## greg13

I think for the most part basic greed on everyone's part is to blame. 
How many business have pensions any more? why? profits & costs.
How many people can afford to save what they should for retirement? why? costs driven by profit. Gas here has gone up 20 cents in the past 2 days. It seems to me that the world is driven by profit and they seem to not care about us little guys. 
Add in the keeping up with the Jones mentality and we are all doomed.Most kids today have no idea of what work is and plan on starting at the top making $100k /yr. and since they can't find a job that's one more hand in the pocket looking for money.


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## Seasoned Oak

Dantheman300z said:


> What do you mean by unearned income long ago?


Kind of a misnomer. Income earned from sources other than a job or salary are sometimes called unearned although they are of course earned. Would include  Interest,Dividends,capitol gains ect.   To put it simply ,the dividend checks surpassed the paychecks a long time ago.


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## Seasoned Oak

greg13 said:


> .Most kids today have no idea of what work is and plan on starting at the top making $100k /yr. .


I try to teach my kids how to earn and save.They can learn easy enough on their own how to spend. It takes some guidance ,not all kids get that. I think the whole apple cart is upside down, and will correct itself eventually but it wont be pretty. Probably not in my lifetime though. 100k a year? Not in small town America unless your doing something really different.


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## sportbikerider78

I think we can all agree on one thing. People are really stupid!  They buy more house than they can afford.  They buy new cars when they should buy used.  They rack up high interest credit cards on stupid stuff like clothes and phones.  They live like they will always be working.

I'm always amazed when I talk to some people with good dual incomes taking in close to $200k.  They own nothing!   The bank owns them.

America was built on personal responsibility.  We are responsible for ourselves and only when you really take care of yourself/family can you truely gain the financial means to help others who have had hardships and bad luck.

Americans need to take responsibility for their retirement just like they need to for their home budgets.  If they don't, don't expect to retire. Which is really not the end of the world.  Don't plan..don't get to retire.

I plan and save and budget.  I also don't factor SS into the retirement equation anywhere.  I have accepted the fact that it was theft my entire life and it may completely be taken from me.  I just wish this system wasn't forced on us and we were allowed to plan the way we should be.

The worst part about SS is that it gives many who are bad at math and common sense an artificial safety net as if their retirement is taken care of.  If it didn't exist at all, maybe people would wake up a bit more.


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## sportbikerider78

peakbagger said:


> Basically starve the government for cash by cutting revenues from taxes and starving the IRS from resources to collect. At some point very soon the choice will need to be made between the young and the old to cut the social contract to keep basic services running. The only reason the government is functioning currently is China and the rest of the world is buying our bonds and the interest rates are low enough that the interest payments are killing the US. The latest tax cut is just the latest version of this and already the conservatives are screaming that the deficit they voted for will mean that big cuts in entitlements have to be made.



The problem is government spending not tax collection.  Tax collection (federal govt revenue) has gone up every year for a very long time.  There is no limit to how much the government can spend, as evidenced by our $20T+ debt.

Democrats and Republicans alike agree on a few things in congress... spending and war. So we always get more spending and more war.  They even bundle it all together in omnibus bill so they don't have to even take a stand on any one issue.  Just all agree for more of the same. 

Whenever they talk about cuts in spending, they are talking about cutting the increase in spending, not the spending itself.  All smoke and mirrors.


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## Seasoned Oak

sportbikerider78 said:


> Americans need to take responsibility for their retirement just like they need to for their home budgets.  If they don't, don't expect to retire. Which is really not the end of the world.  Don't plan..don't get to retire.
> .


This would work in theory but in practice is a bit messy. We get to the point where we cant work anymore but may live another 10 or 20 years that way. I was strong as a bull and worked hard my whole life and spent wisely and invested. Never dreamed id be disabled at 61 yrs old not able to work anymore. I keep thinking what do people do who have NOT planned for this and have NO means of support other than their own labor. Its simple, the burden falls on the ones who can still work and of course more borrowed money that will never be repaid. SS is at the very least something we PAY for not something handed to us for nothing and its a least a base income of sustainability for seniors. Without it all that's left is social services for most.


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## rowerwet

Read a poll that found the snowflake generation isn't bothering to save because they believe the whole system of banks and possibly even capitalism will be gone by the time they grow up


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## Seasoned Oak

rowerwet said:


> Read a poll that found the snowflake generation isn't bothering to save because they believe the whole system of banks and possibly even capitalism will be gone by the time they grow up


The ones who don't have a plan are the ones who need SS the most. SS is the default plan but should be better funded to provide a living minimum subsistence without having to fall back on social services. SS is messed up though with some required to have 40 working credits to qualify and others needing NO credits at all. And getting the same benefit amount.


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## sportbikerider78

Seasoned Oak said:


> This would work in theory but in practice is a bit messy. We get to the point where we cant work anymore but may live another 10 or 20 years that way. I was strong as a bull and worked hard my whole life and spent wisely and invested. Never dreamed id be disabled at 61 yrs old not able to work anymore. I keep thinking what do people do who have NOT planned for this and have NO means of support other than their own labor. Its simple, the burden falls on the ones who can still work and of course more borrowed money that will never be repaid. SS is at the very least something we PAY for not something handed to us for nothing and its a least a base income of sustainability for seniors. Without it all that's left is social services for most.


Sorry you are having a hard time man.  I'm sure that really stinks!!

I understand the system works that way, but how should it work?
Even in your case, if had a middle class income for most of your life and a decent return..you would have an extra million in the bank or much more if you hadn't been paying onto a system.

Hell..we could have a mandatory payroll deduction and it stays in a private fund for you that can't be pulled from till retirement.  No government meddling at all and you can see your fund grow like a 401k.
I'd take a mandatory deduction that is held privately in a fund for me any day of the week over SS.  Not perfect but much better!


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## Seasoned Oak

sportbikerider78 said:


> Hell..we could have a mandatory payroll deduction and it stays in a private fund for you that can't be pulled from till retirement.  No government meddling at all and you can see your fund grow like a 401k.
> I'd take a mandatory deduction that is held privately in a fund for me any day of the week over SS.  Not perfect but much better!


The problem is not me or you or others that prepare. Its the millions that don't plan, thus putting the burden of those final years of support on the public at large. They must be forced to save and SS is just one way to do that
We already do have the option to do both. Most people get all their money back they paid in from SS in the first few years they start collecting. I know I will and ill be starting to collect in a few months, Iv been investing in alternative income sources my whole life which will provide the bulk of my support and I probably did as well as any 401k did.  Plus if your chosen 401k contribution plan went south you would still have something to fall back on which is currently SS. What I don't like is the Govt raiding the ss fund and paying a paltry 2% or whatever back to the fund in exchange for squandering the funds. A much better return would be had from the stock market ,but then they (politicians)couldn't squander the money.


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## EatenByLimestone

The radio this morning stated 8 out of 10 Americans lived paycheck to paycheck.   


Sad, and I hope some start saving before kids/mortgage/life makes it harder to start.


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## rowerwet

I worked with guys like that, it wasn't that we have bad pay or jobs, they just blew it all on the latest smartphone model,  traded in their cars for something newer every year,  and had to have cable TV and Internet. 
Meanwhile I bought a house and lived like I was poor to make extra payments on the house. 
I drove the same car for ten years, never got cable,  kept the same old cell phone,  used dial up, but paid off the mortgage in ten years. 
Now I can buy what I want,  and am entirely debt free, with a good retirement plan. 
Meanwhile,  they've all bought houses and got married , and are struggling to keep it all together. 
Pay check to paycheck isn't always because of poor wages, it is also about poor planning


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## peakbagger

I used to work in large pulp and paper manufacturing complex in rural area. For a rural area the folks made very good money with a high school diploma. There were a couple of prosperous car dealers for an area that had less than 20,000 people amongst a cluster of towns 4 towns. Also a couple of big boat, motor home, snow machine and ATV dealers. Most of the workers "bought" a new truck every three years and replaced their toys in about the same cycle. WIth a union contract there were lots of creative ways to get paid time and half over 40. We had a rule that folks had to go home for a minimum of 8 hours after working 18 and some folks complained about it as it cut their income (they slept on the job). Most of them usually leased a truck rather than buying it but they said they bought it to their buddies. These trucks were usually top of the line 4WD models.

It all came crashing down about 20 years ago when the majority of the pulp an paper market went offshore and the pulp mill shut down and was eventually torn down. Anyone with seniority bumped folks with less.  I remember one individual that was laid off. The day after he got laid off, he went to bank and handed them the house keys, went to the credit union and handed them the boat keys, the motor home keys and the snowmobile keys, then went to the local furniture store and told them to come get the appliances and the furniture. He also gave away his dog to a neighbor and then moved his family at the end of the week out of the area. Every bit of his life was on credit. He wasn't the only one, the local credit union that had catered to the mill employees had to rent a lot to store all the toys that got handed back.

The pulp mill shutdown qualified as a Trade Act event due to unfair foreign competition. Folks who wanted to get retrained and move out of the area made out well but many didn't want to due to their age or lack of interest. The ones that could, put their wives to work and dropped out of the legal employment market and there were a fair share of divorces for those who didn't. Once the Trade Act benefits were over the disability lawyers moved in and many folks got declared disabled so they could get SS disability insurance. Its pretty well correlated that when a big rural employer closes down the number of disability filings goes up in the next few years.  

The other thing that happened is one of the former employees who was always into pump and dump penny stock schemes when he worked there, got hired by Edwards Jones. He was trained and set up an office in town and got many of the former co-workers to hand over their 401ks for him to manage. He still has some real nice toys and nice house plus a camp on a lake and new cars.


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## Seasoned Oak

peakbagger said:


> For a rural area the folks made very good money with a high school diploma. .


Ill bet there were a few, but painfully few, who invested and saved something, lived below their means and were not really devastated when the big employer shut down. Probably less than 5%.


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## peakbagger

The majority were graduates of the local catholic school system (taught in French no less). I dont think financial planning was taught. The "deal" that had been in place since the 1880s was that if you worked for the mill you had a good job for life. Along with the good jobs were smoking and drinking so they usually last many years past retirement age.

Many had pensions for half their career and SS. They made good money early in their career right out of high school so their early SS contributions were relatively high so they are better off than many folks as their monthly checks are going to be relatively high.


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## firefighterjake

peakbagger said:


> I used to work in large pulp and paper manufacturing complex in rural area. For a rural area the folks made very good money with a high school diploma. There were a couple of prosperous car dealers for an area that had less than 20,000 people amongst a cluster of towns 4 towns. Also a couple of big boat, motor home, snow machine and ATV dealers. Most of the workers "bought" a new truck every three years and replaced their toys in about the same cycle. WIth a union contract there were lots of creative ways to get paid time and half over 40. We had a rule that folks had to go home for a minimum of 8 hours after working 18 and some folks complained about it as it cut their income (they slept on the job). Most of them usually leased a truck rather than buying it but they said they bought it to their buddies. These trucks were usually top of the line 4WD models.
> 
> It all came crashing down about 20 years ago when the majority of the pulp an paper market went offshore and the pulp mill shut down and was eventually torn down. Anyone with seniority bumped folks with less.  I remember one individual that was laid off. The day after he got laid off, he went to bank and handed them the house keys, went to the credit union and handed them the boat keys, the motor home keys and the snowmobile keys, then went to the local furniture store and told them to come get the appliances and the furniture. He also gave away his dog to a neighbor and then moved his family at the end of the week out of the area. Every bit of his life was on credit. He wasn't the only one, the local credit union that had catered to the mill employees had to rent a lot to store all the toys that got handed back.
> 
> The pulp mill shutdown qualified as a Trade Act event due to unfair foreign competition. Folks who wanted to get retrained and move out of the area made out well but many didn't want to due to their age or lack of interest. The ones that could, put their wives to work and dropped out of the legal employment market and there were a fair share of divorces for those who didn't. Once the Trade Act benefits were over the disability lawyers moved in and many folks got declared disabled so they could get SS disability insurance. Its pretty well correlated that when a big rural employer closes down the number of disability filings goes up in the next few years.
> 
> The other thing that happened is one of the former employees who was always into pump and dump penny stock schemes when he worked there, got hired by Edwards Jones. He was trained and set up an office in town and got many of the former co-workers to hand over their 401ks for him to manage. He still has some real nice toys and nice house plus a camp on a lake and new cars.



Sounds a lot like some of the mill towns here in Maine . . . I vividly remember back in the 1980s going through Millinocket and Medway and seeing homes with the nice trucks, sports cars, boats, ATVs, etc. and thinking those guys had it all figured out. Go through the town now and it's a whole other scene with many homes being sold at wicked low prices and folks with the brand new toys are few and far between.


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## Seasoned Oak

You can also go overboard with the whole frugal, saving thing. We have too enjoy life along the way. A little balance always helps. So little time left,use it wisely. Time and health is quickly becoming more valuable than anything else.


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## sportbikerider78

Some towns only exist because a big employer moved in and built the town.  When the plant goes belly up,,,time to move.  Same with all those super broke coal towns in WV.  They are super poor.  I get that they grew up there and know nothing else, but life can be rough.
Employment is there for people willing to stay off drugs and come to work every day.

I know a guy that is a south african.  He moved here with the clothes on his back in his late teens.  Now he is a mechanical engineer, works 8-5 there, then goes to his restaurant..which he owns.

I'm probabally a lot like you guys.   I work hard.  Save.  Spend sparingly but I do splurge once and a while on things that make sense.


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## EatenByLimestone

I think there is a way of saving that most don't take advantage of... gardening.  

A 1 dollar package of beans will provide hundreds of pounds of beans.


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## Seasoned Oak

EatenByLimestone said:


> I think there is a way of saving that most don't take advantage of... gardening.
> A 1 dollar package of beans will provide hundreds of pounds of beans.


A lot of gas too


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## sportbikerider78

EatenByLimestone said:


> I think there is a way of saving that most don't take advantage of... gardening.
> 
> A 1 dollar package of beans will provide hundreds of pounds of beans.



But a hundred lbs of beans costs, what?  200-300 bucks and takes how many hrs to cultivate?  

I don't think gardening saves money at all, unless you have lots of time.


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## peakbagger

I am not sure if its the gardening as much as its the lifestyle that frequently goes with it. The time versus cost argument crops up all the time. The same argument could be and is made for burning firewood . I think most gardeners do it as much for a hobby as a practical way to grow their own food. In general most folks I know that grow veggie gardens dont tend to be keep up with the Jones type.

I like to pick wild blueberries, I have a favorite mountain over in Maine that I like to go pick them at. (not my blog but good pictures https://1happyhiker.blogspot.com/2012/10/rumford-whitecap-in-technicolor.html ). I probably burn $10 of gas to drive over and back and it takes me about 8 hours to pick tow or three gallons. I have to hike up the mountain, that takes about an hour and back down again. Its a nice day out with great views. I have them with my bowl of cereal most days usually until spring before I run out (I am getting close to running out as I write this). Yes they are wild and "organic" but once I pick them I have to spend few more hours cleaning the leaves and sticks out of them. I can go to Walmart and by a big bag of Wyman's wild Maine blueberrys for about $3 a pound (much better than those cultivated one that taste like blue grapes). They are clean, nicely sized and taste the same. So I don't save any money picking my own but its an excuse to go visit a favorite mountain. I expect any fisherman will have the same approach the fish they catch if just minor excuse for getting out. 

I could care less about organized sports. I know many folks with consumptive lifestyles who are the ones highly likely to not have enough saved for retirement who have season tickets or at least attend numerous weekend football, baseball and or Nascar races, they are routinely dropping $1000 a weekend to attend the game. What it boils down to is they are laying out a lot of cash to go look at someone else doing something. I would much rather go do something myself with some friends and spend a lot less money.  I know the sports nuts think I am strange and probably missing out on the good old boy network to move up the corporate chess board but realistically I dont need to play those games any more and have always planned my finances so I didnt have to.


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## sportbikerider78

I hear ya on the sports thing.  I don't get it at all..likely because my dad didn't get it and he passed that on to me.  I prefer doing, not watching someone do.  
Funny how most sports fans are not in shape at all..I'm not a sports fan and I have more athletic ability then all of my sports fans friends combined.  And I'm far from super good shape.  I just find sports a complete waste. I'd rather work on a car or learn how to do something instead of staring at a TV or paying someone else to work on my car.  

For gardening,,,you gotta want it.  It has to be something you enjoy.  For me, it's not my thing.  At least right now, with small kids, work, gym time, church, trying to find time to ride..ect.


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## EatenByLimestone

You know, it's my kid that pushed me back into it.   Knowing what was in our food became very important.   Growing it myself was the only way I could be sure it wasn't GMO or covered in pesticides.

She loves fruit for snacks.   In summer, I hand her a bowl and tell her to go pick raspberries or blueberries.    She comes back full, with half a bowl filled with fruit.  

She isn't in front of a tv or  computer, she's outside burning energy, watching bees, insects, etc, and out of our hair.  When I go out with her to harvest, we chat while picking.   Now there are some times I have to bite my tongue, like a couple days ago when she decided to try to cut a wire fence with my felco pruners...  I'll need to resharpen them.  Life will go on though.  I can't say I wouldn't have tried the same.


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## Seasoned Oak

sportbikerider78 said:


> I hear ya on the sports thing.  I don't get it at all..likely because my dad didn't get it and he passed that on to me.  I prefer doing, not watching someone do.
> .


I never got the sports bug either. Seems like a lot of money ,time and effort expended with(in a sense) nothing to show for it IMHO. But im not knocking it as it seems such a large portion of the population is deep into it. So much so that we all must subsidize massive stadiums construction by the general public justified by some greater good analogy.


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## maple1

Seasoned Oak said:


> I never got the sports bug either. Seems like a lot of money ,time and effort expended with(in a sense) nothing to show for it IMHO. But im not knocking it as it seems such a large portion of the population is deep into it. So much so that we all must subsidize massive stadiums construction by the general public justified by some greater good analogy.



I think I would class spectator sports, as entertainment. 'Sports' to me is more ones that you participate in yourself. But nothing wrong with either.


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## sportbikerider78

Seasoned Oak said:


> I never got the sports bug either. Seems like a lot of money ,time and effort expended with(in a sense) nothing to show for it IMHO. But im not knocking it as it seems such a large portion of the population is deep into it. So much so that we all must subsidize massive stadiums construction by the general public justified by some greater good analogy.


Yup.  And massive school sports programs.


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## kennyp2339

I often wonder were I fit in in the whole scheme of things, I have been a natural born saver and come from a very thrifty home. I remember when I was first hired at my job 12 years ago an old timer physically grabbed me by the arm and marched me to the credit union pamphlets and told me to start an account with them, automatically deducting $100.00 a week from my pay check. As time went on and I got raises I adjusted my automatic deposits. I'm also in 2 pensions (union and company) I have a 401k which I contribute 10% of my gross income to, the company has a pretty decent matching program and it seems that my balance is growing at a decent rate.
When I went to purchase my home, I was pre-approved for a 350g mortgage, my realtor insisted that I looked at these huge 4 bedroom colonials that were on the top end of my pre-approved loan. I was firm and stayed at my 225g budget, I even told the lady that I would be looking for a different realtor if she didn't listen to me, I obviously purchased a home, it took my about 7 years into the mortgage but I now try to pay between 10-15k extra a year to reduce my principle.
Through out the years (remember I'm only 32) I have continually pondered my finances and have personally wondered if I was doing everything correctly, do I have the appropriate savings, am I truly on the right path with retirement, am I wasting money, or do I feel like I'm wasting money because I'm fairly frugal with my purchases.
I don't know what the right answer is. I bought a new diesel truck in 2011, paid it off by 2015, plan on keeping it until the wheels fall off; I bought that big tractor (mainly as a toy, but I use the thing a lot with project I never thought I would do) the scag walk behind mower (went big figuring it will last for 20 years minimum) The BK woodstove, again high end, but worth it with wood usage and heat production, the grizzly atv  (got to have fun) but hardly ride anymore. The question is did I really need all these things? Am I a wasteful spender? I don't know, I use the stuff so its not like a frivolous waste, with the exception of the truck, everything else was paid in full with cash. 
I'm being open here, not to gloat or tout my whistle, but to get input, am I balanced here, or is there work needed to be done.


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## Seasoned Oak

kennyp2339 said:


> I often wonder were I fit in in the whole scheme of things, .


Sounds like your in the smaller % of the population that have fully funded your retirement and also you life. Other than that the only question is are you (and family) happy with your decisions. That's really the only thing that matters. I believe in living life to the fullest.The finances are only a tool ,but a necessary tool.


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## EatenByLimestone

I agree with Randy.  You're saving.  Good on ya!  But you're enjoying life too.  You have to find a balance and it sounds like you have.  

As far as ranking against peers, The Millionaire Next Door is probably at your local library.  There are some formulas in there to help you figure out how you rank vs others in savings.


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## RobbieB

Yes, the most important thing is to live below your means so you can save and invest.  That doesn't mean you can't celebrate and splurge, just not all the time and on everything.  Live for what you want and not to impress the neighbors.


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## peakbagger

We have brought up the Millionaire Next Door before and I highly recommend getting a copy. 

The problem is the marketing based economy is very effective at convincing most people that they need more to keep up with the jones and the way to do that is borrow money now to buy toys now and pay later. Nothing wrong with making car payments, the trick is once the car is paid off, keep making payments into a reserve account so when the wheels do fall off, you can write a check for the next one. The interesting part about writing a check (or paying cash) for a new car is its more real. Car dealers are very good at divorcing the parts of the transaction, first they get the buyer to pick the car of their dreams and get emotionally fixed on buying a particular vehicle and then they hand the buyer over to the business manager to figure out a way to pay for it. They rely on that instant gratification usually trumps the delayed pain of writing checks every month for as long as 6 or 7 years.

I think most folks get burned once of twice getting pulled into that racket. That's why car dealers really don't like cash shoppers, its a lot harder to get someone to buy more vehicle than they need when they only have so much in the checking account.

Once a person gets loan free, the key is keep putting the payments into savings instead of paying the loan. Eventually once the get ahead and invested then if they want to buy toys they can use cash.


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## EatenByLimestone

Yeah, if new cars were paid in cash only, it wouldn't be long before the only brand we'd see around was Kia!    Fewer $60k trucks would be sold!


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## Seasoned Oak

EatenByLimestone said:


> Yeah, if new cars were paid in cash only, it wouldn't be long before the only brand we'd see around was Kia!    Fewer $60k trucks would be sold!


Although i can afford a new truck and would like one, i just cant seem to get around the fact that the 2  20+ yr old Silverado trucks i drive now fulfill every possible need i have for  truck.  A new truck would do NOTHING more for me than im already doing now. Plus another benefit is im not too particular about taking them out on muddy mountain roads or loading them up with wood.


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## EatenByLimestone

100% agree!    My truck is an 04.   Previous was a 92, and only left because I needed to fit a child's car seat!

A few years ago the wife got rid of her 1st car, purchased new in '98.  She wanted a CRV this time.  Purchased cash, but some moved a little slower than the sales process, so financed $5k for a week.


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## sportbikerider78

I always hated paying for cars, even though I love cars.  Solution?  Get a sales job that pays for gas, insurance and payments. 

Now I reallllllyyyy enjoy my car.   I have noticed a syndrome where my right foot gets heavier now that someone else is paying for  the 91 premium.


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## Seasoned Oak

In my 20s  was adamant that i would do something different than the average person. I kind of succeeded in that in my 30s i was lounging on a beach and exploring islands in the south pacific for 3 to 4 months every winter. Then came marriage and a family and i had to wake up from that dream. Now in my 60s, the tools that helped me do that will also support me in retirement. Being self employed in itself does not always translate into a great retirement but ill at least be self sustaining,unless i happen to live too long.


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## sportbikerider78

Yup.  If if wasn't for family, I'd be working a lower wage job, spending more time on my own, and likely living out west in Montana somewhere. 

But....kids..they're amazing.  

My adventure is coming back as soon as the oldest is over the age of 7.  That's when we start riding motorcycles together and backpacking.


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## EatenByLimestone

Mine is 8 and more fun every year!   The wife wishes she was still changing daipers.  I'm ok with not doing that!


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## georgepds

Seasoned Oak said:


> That's a pretty good deal. I  doubt if that would cover Healthcare alone here. My Health insurance (2 people) is $30K a year alone.




Recently had to look at this hard.. my wife retired at 62, and we lost her great, cover all, insurance.. health care for her is ~$500/month or $6000/year. I'm still working, but when I don't,  between medicare part b, and med medicare supplemental the cost will be similar

That makes ~$12K/year.. how do you get it up to $ 30k?


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## georgepds

kennyp2339 said:


> I often wonder were I fit in in the whole scheme of things,.....I don't know what the right answer is......



Re the whole money thing.. I never worried about it until I was past thirty. I was in school all the time and lived like a monk  ( well a monk with a live in girlfriend, and lots of friends)  Fun was studying in the Boston Public library for a change, or hiking the AT, of feeding a bunch of ravenous grad students at a communal dinner, or the study itself.. which was like a meditation back in the day

Once I did break away from school and started working in the open world, I didn't need all that I made and just tucked it away.  Somewhere around the crash of 89 I figured it was time to learn a bit about investing, not go crazy, just enough to not make the simple mistakes ( e.g. chasing last years gain at Fidelity). Hulbert, Malkiel, Jane Bryant Quinn, John Bogle, and Fama and French were my guides... that helped a lot


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## Seasoned Oak

georgepds said:


> Recently had to look at this hard.. my wife retired at 62, and we lost her great, cover all, insurance.. health care for her is ~$500/month or $6000/year. I'm still working, but when I don't,  between medicare part b, and med medicare supplemental the cost will be similar
> 
> That makes ~$12K/year.. how do you get it up to $ 30k?


Mine and my wife combined is About $2350 a month. Add to that all the Co-pays and deductibles out of pocket. Insurance keeps going up and what they cover keeps going down. Her eye drops had a small co pay last year,this year its $500 (co-pay) just for one very small bottle. My insurance is about 50% higher than hers probably because im older,and had a heart attack in the past. I was self employed so no help from any job related insurance ,its all on the open market. I think obama care may have destroyed the private market because before it we only paid $300 a month for her on the private market and i was self pay as you go. Im now disabled but cant get disability because i listed my wife on our income tax form first for 2 of the last 5 years(so she could get her 40 credits) so my only saving grace is ill be 62 in a few months and can get early retirement. A bit puzzling cuz I see people all the time that never worked at all on disability. Iv only been working for 48Yrs.


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## Seasoned Oak

sportbikerider78 said:


> My adventure is coming back as soon as the oldest is over the age of 7.  That's when we start riding motorcycles together and backpacking.


I wont be doing any backpacking anymore as i wear a leg brace to walk now, but I just bought my 11 Yr old a trailbike. Plan to pick up one for myself soon,i cant walk too good anymore  But i can ride like hell!


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## begreen

Wage stagnation has affected savings. The reality in America today is that real wages have been stagnant for a long time while real costs of living (not the seriously hedonized official CoLI) have skyrocketed. In the Seattle area it's ridiculous how far behind the CPI is from reality. Nationwide the cost of healthcare, insurance, housing, food, higher education, etc. have all increased steadily. 

This means a lot less money left over at the end of the day for middle to lower income wage earners to put into savings. Low wage earners have been hit the hardest. They can barely pay their bills these days. In the meantime the growth for the very top income bracket has risen dramatically. This disparity is neither healthy nor sustainable.





https://www.epi.org/publication/charting-wage-stagnation/


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## Jan Pijpelink

I must be very fortunate. The company I work at is 100% employee owned. What I put in my 401K (12%), the company puts in in company shares (8% which is max. allowed). Shares go up 10-12% every year. My wife and I are insured for everything through the company, including life insurance, dental, health, vision, STD, LTD, etc. Company pays 85-90% of the premiums.


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## begreen

Indeed you are, as are many professionals.


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## sportbikerider78

begreen said:


> Wage stagnation has affected savings. The reality in America today is that real wages have been stagnant for a long time while real costs of living (not the seriously hedonized official CoLI) have skyrocketed. In the Seattle area it's ridiculous how far behind the CPI is from reality. Nationwide the cost of healthcare, insurance, housing, food, higher education, etc. have all increased steadily.
> 
> This means a lot less money left over at the end of the day for middle to lower income wage earners to put into savings. Low wage earners have been hit the hardest. They can barely pay their bills these days. In the meantime the growth for the very top income bracket has risen dramatically. This disparity is neither healthy nor sustainable.
> 
> View attachment 225326
> View attachment 225327
> 
> https://www.epi.org/publication/charting-wage-stagnation/


No doubt about it.  Much of it is because our dollar is worth much less than it has been.  Inflation is a killer.  Real inflation as seen by the CPI not just the value of a dollar because the federal reserve prints trillions in cahoots with congress/banks. 

I'm very fortunate with healthcare.  My company is WAY more generous than previous companies I have worked for.  For my family I used to pay about $750/month, now I pay less than $300 per month.  The coverage is good and the annual deductible is around $1500.


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## Seasoned Oak

Healthcare cost affects everyone thats for sure.. Plus paying property taxes now going up every year now to pay for public service employees HC,Pensions,Raises ect. Ripples through the economy.  Makes it that much harder to be self employed and still save for retirement at the same time.


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## firefighterjake

Pension here . . . I pay part and the City pays part. I also pay into a 457 plan, which is like a 401K plan as I do not believe the pension alone will be enough to support us when I "retire" (although the truth of it is I hope to not retire and it will be my wife's retirement plan.) A lot of the guys on the line can retire after 25 years, but a fair share of them do not due to the costs of healthcare. As it is, our City's healthcare plans are relatively expensive -- I'm paying $125 or so each week for my wife and I -- and it isn't even that good of a plan.


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## begreen

Here is a visual representation of how Americans in 2012 thought wealth was distributed about how it was in reality. This was in 2012. It has gotten worse. This is why savings are low.


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## Jan Pijpelink

Sad.


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## begreen

The reality truly is.


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## Seasoned Oak

This is why tax rates were 90 % for the wealthiest Americans at one time. To prevent them from buying up the whole country eventually. The most brazen,naked lie in tax policy is the paltry rate on capitol gains and dividends. The people pushing this will say its to protect mom and pop who have few shares of stock and pension funds but in reality they are easily protected with a low income exemption. Its  really to protect Bill Gates and people in his income bracket. And yes the top 1% HAVE bought up most of america already. This is the reason Mitt Romney has a 14% tax rate on his $250 million a year. And even after that was exposed,nothing changed.


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## EatenByLimestone

Where would you set the income exemption?  Would you change it for San Francisco vs po-dunk, state of your choosing?  They would have radically different minimum costs to live.


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## sportbikerider78

Seasoned Oak said:


> This is why tax rates were 90 % for the wealthiest Americans at one time. To prevent them from buying up the whole country eventually. The most brazen,naked lie in tax policy is the paltry rate on capitol gains and dividends. The people pushing this will say its to protect mom and pop who have few shares of stock and pension funds but in reality they are easily protected with a low income exemption. Its  really to protect Bill Gates and people in his income bracket. And yes the top 1% HAVE bought up most of america already. This is the reason Mitt Romney has a 14% tax rate on his $250 million a year. And even after that was exposed,nothing changed.



The solution to income distributions is not more taxes.  It is less taxes.

More money for the rich does not mean less money for everyone else.  This is bad economics.  There is no fixed amount of revenue or income generation.  Wealth is created every day.  There is no 1 pot of money and everyone has to fight for a share.

Rich people have effectively low tax rates because they have investments like rental properties, businesses and others (giving some away) that reduce their effective tax rate.  You can take advantage of those just like a rich person.  I'm looking at a rental properties to do exactly the same thing.  It is smart tax avoidance and perfectly legal. 

The rich start big businesses.  I work for a rich guy and I'm super glad he is rich.  He is generous to us employees and does his best to make us as wealthy as possible.  He is probably in a 2%'er.  He is not some super bad guy, he is a hard working American that deserves every dollar he made.
This victimization of the rich as if they are 'putting it to the little guy' is laughable.
The corporate tax breaks he just got under the new tax plan are getting reinvested back into the business in the form of hiring new people and building a new building!  That's awesome!

When rich people put their money away in a bank and save it, it naturally reduces the interest rate for the rest of us.  The bank now has more money to loan out to everyone.  This is a good thing.  This spurs capital investment and drives the economy forward because capital is cheap.

As little guys, what we should be united in fighting against is why $100k today is worth very little 30 years from now.  It is absurd that our money loses its value like it does.  That is the single biggest thing that hurts saving.  If we can agree on one thing, let's agree on keeping the hard earned money we work for.


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## peakbagger

A major drag on prosperity is health care costs. They are typically running twice inflation. Our small company shares the costs they pay for health care with us and the reality is that much of our potential raises are eaten up by increasing health care costs. The benefits haven't stayed the same either, more co pays and deductibles. The bummer is typical health care costs are inversely proportional to income, lower income folks tend to have higher average costs then higher income.

I have a High Deductible Health Care plan with a Health Savings Account, I use the HSA as an investment vehicle so I write checks for any medical expenses other than a few routine items (physicals and shots)and the other stuff adds up. I hope the Berkshire Hathaway link up with other major companies to come up with better system works out. Its ridiculous how much money goes into the hands of the middlemen in the US. Both Warren Buffet and Charlie Munger have had comments on this in the past year. 

A plug for a HSA, unlike the old medical spending accounts where you had to spend it or loose it, a HSA just rolls this years leftover money into next year. The trade off is you need to be in High Deductible Health care plan to be in one. Our firm allows us to switch plans every year so some folks save up  medical expenses that can be planned for every other year and switch between a lower deductible standard plan and a high deductible plan every other year. That way they can contribute to an HSA every other year.  Contributions are pretax money that is deductible like an IRA off each years taxes but as long as the money is spent on some fairly broadly defined medical costs, its tax free coming out and not subject to mandatory RMDs. Pretty much the ideal long term investment. A lot of companies push using "their" designated provider to hold the account but the law is you can pick any firm you chose. I use HSA Adminstrators (healthsavings.com) as I can access a small family of no load Vanguard funds and the plan management expenses are quite low. Compared to my companies standard option the annual fees area about 1/4 the amount and the fund choices are far better as the company plans are front or back loaded funds. The bummer I and the company  can only put so much a year, $3,450 for singles plus $1000 catch up as I am over 50, but I make darn sure that between my company contribution and my contribution that I max it out early every year.


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## sportbikerider78

begreen said:


> Here is a visual representation of how Americans in 2012 thought wealth was distributed about how it was in reality. This was in 2012. It has gotten worse. This is why savings are low.




No one can explain how the rich making less makes others earn more.  Anything closer to socialism sure isn't the answer.  That just makes everyone earn less and keep less.


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## moey

My views somewhat changed on this recently. 

In my 20s I worked non stop basically when I woke up to when I went to bed. Literally didnt have enough time to spend the money I made. I saved a lot and through luck investing amassed considerable wealth. My wife sais it was good investing I usually think of it as successful gambling. I used to think everyone should be saving money for retirement and tomorrow. I do like old stuff though I drove my high school car until I was in my 30s it became a status symbol for me much like a new car would to someone. I still have flannel shirts I wear my wife usually sais the 90s called and they want their shirt back. 

Recently I hurt my back I got whooping cough for about 5 weeks I coughed miserably. Tore several disks in my back very painful. Its been close to 8 months now I can now to simple tasks without being in considerable pain. Ill go some place now and see someone who is overweight and all I say to myself is I bet their back doesnt hurt as bad as mine. What good did taking care of myself all those years do? Hint most the time I think nothing! My point is if I had to do it over again maybe it would have been better to party like a mad man and spend lots of money I think I would have enjoyed it more rather then saving for tomorrow and taking care of myself. You never know what tomorrow brings. 

Why save when your going to die early? Another view. 

I think medical advances have made it very difficult to save for retirement. This sounds crude. But you can keep a person alive long past there contribution towards society. This killed pensions. My father collected a pension for 28 years. My mother still collects it. They have collected more money then he earned at this point. Thats not sustainable.


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## Seasoned Oak

Im not anti-rich at all,but i fail to see why a Billionaire gets a 14% tax rate and millions out there busting their a$$ for peanuts pay a higher rate. Is that even remotely fair to the rest of us. The usual line is "to spur investment" is BS to the tenth power. So why dont we lower the rates on labor to spur labor.  Which is why the deck will always be stacked against the masses. Even Warren Buffet agrees with me on this one ,or i agree with him,either or.


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## Seasoned Oak

moey said:


> My father collected a pension for 28 years. My mother still collects it. They have collected more money then he earned at this point. Thats not sustainable.


In doing the math i find that i will collect everything i paid in not including any interest in about 3 years. So yea, SS is woefully under funded. Perhaps when the entire economy collapses due to the National debt and we are all forced to live within our means and what we actually produce, not off borrowing for decades they will come up with a more sustainable plan or not. Until then its all about spreading around(borrowed) freebies to get reelected. None of its sustainable ,not health care,not the Debt,or deficit spending,unfunded pensions,welfare state ect.


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## Seasoned Oak

sportbikerider78 said:


> Rich people have effectively low tax rates because they have investments like rental properties, businesses and others (giving some away) that .


Iv had rental properties my whole life. Not much money to be made there. But it still doesnt answer the question why does money you earn while sleeping(dividends,capital gains ect) carry a much smaller tax rate than money you bust your butt for.  Should your local policeman,teacher,fireman ect pay a higher tax rate than a billionaire hedge fund manager. The reason is they are buying politicians to put the fix in for them.


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## peakbagger

FYI, the long term capital gains rates and dividends do go from 15% to 20% for those earning over $479,000 effective 2018.


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## BrotherBart

peakbagger said:


> FYI, the long term capital gains rates and dividends do go from 15% to 20% for those earning over $479,000 effective 2018.



Dang it. Thanks for the heads up.


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## EatenByLimestone

Seasoned Oak said:


> Im not anti-rich at all,but i fail to see why a Billionaire gets a 14% tax rate and millions out there busting their a$$ for peanuts pay a higher rate. Is that even remotely fair to the rest of us. The usual line is "to spur investment" is BS to the tenth power. So why dont we lower the rates on labor to spur labor.  Which is why the deck will always be stacked against the masses. Even Warren Buffet agrees with me on this one ,or i agree with him,either or.




So you'd be in favor of a flat tax on all income regardless of the source?  That would make filing taxes really easy.


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## Jan Pijpelink

EatenByLimestone said:


> So you'd be in favor of a flat tax on all income regardless of the source?  That would make filing taxes really easy.



That is what I experienced when living in Singapore. For everybody 9% income tax. No Social Security, does not exist there. Tax form is 2 pages. Time to fill out: 5 minutes.


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## greg13

Personally I would like to explore doing away with income tax and adding a federal sales tax. that would do away with exemptions. EVERYONE buys things, those with more money spend more than than people with less money. 

As for the health care industry, I feel that should be 100% non profit. Health insurance CEOs & board members have no business making million dollar incomes at OUR expense! Make them justify their rates.


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## Jan Pijpelink

greg13 said:


> Personally I would like to explore doing away with income tax and adding a federal sales tax. that would do away with exemptions. EVERYONE buys things, those with more money spend more than than people with less money.
> 
> As for the health care industry, I feel that should be 100% non profit. Health insurance CEOs & board members have no business making million dollar incomes at OUR expense! Make them justify their rates.



I am original from The Netherlands. Federal Sales Tax is there 21% and the highest income tax bracket 62%; it's not working well. Federal Sales Tax alone is not working unless it is above 50%. Agree on your health care statement.


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## begreen

Health care costs are a killer here. Every other industrialized nation has figured this one out. It should not be a profit center.


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## Jan Pijpelink

begreen said:


> Health care costs are a killer here. Every other industrialized nation has figured this one out. It should not be a profit center.



Not only here. In The Netherlands and other European nations they had the system of a basic package for everybody and a fixed price. That has changed now. It became so expensive, that 30% cannot afford it anymore and are without any coverage.


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## sportbikerider78

begreen said:


> Health care costs are a killer here. Every other industrialized nation has figured this one out. It should not be a profit center.


No they haven't.  Costs and care aren't great in many countries.
When you pass laws like Obamacare that say everyone has to have insurance for a silly amount of care they don't need, the demand goes up and so does the price. 

Many doctors are starting monthly membership practices and don't take insurance at all.  Come as much as you like...same fee applies.  
There is a hospital in Wisconsin that doesn't take insurance for surgeries.  Costs are way down, quality of care is way up.  People pay out of pocket for things like a bypass surgery.  
Medical facilities of all types have become overwhelmed with burdensome paperwork from insurance companies and other bureaucracy.  It drives the costs way up for us.  When that is stripped away, they can reduce paperpushers/admin and get back to caring for patients.


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## sportbikerider78

Seasoned Oak said:


> Im not anti-rich at all,but i fail to see why a Billionaire gets a 14% tax rate and millions out there busting their a$$ for peanuts pay a higher rate. Is that even remotely fair to the rest of us. The usual line is "to spur investment" is BS to the tenth power. So why dont we lower the rates on labor to spur labor.  Which is why the deck will always be stacked against the masses. Even Warren Buffet agrees with me on this one ,or i agree with him,either or.


I'm all for a flat tax.  I think that makes a ton of sense.  

Buffet is pretty far away from a free market proponent.  He, like many others, has made a killing with exclusive buying rights (shady deals with Fanny Mae) to foreclosed homes.  He made an absolute fortune off of people losing their homes.


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## sportbikerider78

Seasoned Oak said:


> Iv had rental properties my whole life. Not much money to be made there. But it still doesnt answer the question why does money you earn while sleeping(dividends,capital gains ect) carry a much smaller tax rate than money you bust your butt for.  Should your local policeman,teacher,fireman ect pay a higher tax rate than a billionaire hedge fund manager. The reason is they are buying politicians to put the fix in for them.



I save a big part of my salary...so do lots of Americans, even though lots don't.  Don't we benefit from this with our investments?

If there is a single income teacher, firefighter, cop in the 14% bracket, they are don't something wrong with their taxes.  That might be the bracket they fall in before deductions, but not total effective rate.  BTW, state cops in NY make great money.  Many over $100k.  They do really well with OT.


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## peakbagger

By the way its not just the US many European countries have a problem that they have negative prop


sportbikerider78 said:


> I'm all for a flat tax.  I think that makes a ton of sense.
> 
> Buffet is pretty far away from a free market proponent.  He, like many others, has made a killing with exclusive buying rights (shady deals with Fanny Mae) to foreclosed homes.  He made an absolute fortune off of people losing their homes.



He and a lot of other folks made a fortune on foreclosed homes, they didn't foreclose on them they just bought them when no one else wanted them as there was glut in the market.  Berkshire and others may have made a fortune picking up the remains but they didn't cause the crisis. That lies squarely on the banks getting creative in lending money to folks who really didn't qualify to buy a home helped along by politicians that told freddy and fannie to reduce standards down low. Berkshire was just following the "Be fearful when others are greedy and greedy when others are fearful" theory. He is not the only one, Baron Rothschild, an 18th-century British nobleman and member of the Rothschild banking family, is credited with saying that "the time to buy is when there's blood in the streets." That's contrarian investment.

I think we all do this on occasion at a far lower level. We find a deal on craigslist and it turns out that the seller needed to sell something to raise cash to pay off bills. We aren't responsible for why the seller owes the money, we are there to get a deal. I am not forcing the seller to sell, I am a willing buyer and they need to be willing seller or I go home.

I waited way to long to buy Berkshire B stocks and wish I had bought more.


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## Seasoned Oak

EatenByLimestone said:


> So you'd be in favor of a flat tax on all income regardless of the source?  That would make filing taxes really easy.


Its simple ,earned and unearned income should be taxed at the same rate. Like i said why should someone pay 39% if they get a W-2 form or 15%(now20%) if they get a brokerage statement. All the Super rich people dont get W-2s(wages ,Salary) . Trillions getting taxed at 20% while those making peanuts in comparison get taxed up to 39%  .How is that even remotely fair. IMO


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## sportbikerider78

peakbagger said:


> By the way its not just the US many European countries have a problem that they have negative prop
> 
> 
> He and a lot of other folks made a fortune on foreclosed homes, they didn't foreclose on them they just bought them when no one else wanted them as there was glut in the market.  Berkshire and others may have made a fortune picking up the remains but they didn't cause the crisis. That lies squarely on the banks getting creative in lending money to folks who really didn't qualify to buy a home helped along by politicians that told freddy and fannie to reduce standards down low. Berkshire was just following the "Be fearful when others are greedy and greedy when others are fearful" theory. He is not the only one, Baron Rothschild, an 18th-century British nobleman and member of the Rothschild banking family, is credited with saying that "the time to buy is when there's blood in the streets." That's contrarian investment.
> 
> I think we all do this on occasion at a far lower level. We find a deal on craigslist and it turns out that the seller needed to sell something to raise cash to pay off bills. We aren't responsible for why the seller owes the money, we are there to get a deal. I am not forcing the seller to sell, I am a willing buyer and they need to be willing seller or I go home.
> 
> I waited way to long to buy Berkshire B stocks and wish I had bought more.


After the housing crisis of 2008'ish time frame, through Fanney Mae, HUD and Freddie Mac the US government (aka the US taxpayer) was left holding tons of foreclosed properties.  They were auctioned off at incredible prices to just a few private investors and you and I were not able to buy  those homes.
This was all just on the heels of $750B  TARP payout to banks back in 2008....so the banks could not fail.
So the same banking institutions (Goldman Sachs, JPMorganChase, Citigroup) who helped caused this sub-prime lending mess, who got a huge bailout, are now entitled to buy out at a super discount, bulk foreclosed homes.

I will always advocate for free market and free enterprise capitalism.  This is crony capitalism at its finest, enabled by Congress, the federal reserve, and huge corrupt banking institutions to favor their rich buddies.  Rich guy socialism.

In 2011 there was a partial audit (Government Accountability Office) of the federal reserve that revealed they paid out more than $16T (yes, that's a T) to financial institution and corporations through the world.  The biggest recipient was Citigroup with $2.5T....next runner up was Morgan Stanley.  This is the biggest transfer of wealth ever recorded, that I know of, and few even know it happened.


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## Seasoned Oak

sportbikerider78 said:


> So the same banking institutions (Goldman Sachs, JPMorganChase, Citigroup) who helped caused this sub-prime lending mess, who got a huge bailout, are now entitled to buy out at a super discount, bulk foreclosed homes.
> I will always advocate for free market and free enterprise capitalism.  This is crony capitalism at its finest, enabled by Congress, the federal reserve, and huge corrupt banking institutions to favor their rich buddies.  Rich guy socialism.
> .


And the handfull of people in the 1% who have amassed 99% of this countries wealth largely due to paying 15% tax rate are also among the group able to scoop up property at  fire sale prices after the people who paid on them for  30 years are evicted. Its painfully obvious the system is skewed to the super rich. I more fair system would make a whole lot of millionaires  and not just  few billionaires.


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## Seasoned Oak

sportbikerider78 said:


> I'm all for a flat tax.  I think that makes a ton of sense.
> 
> Buffet is pretty far away from a free market proponent.  He, like many others, has made a killing with exclusive buying rights (shady deals with Fanny Mae) to foreclosed homes.  He made an absolute fortune off of people losing their homes.


Buffet, like him or not, is one of the few people publicly criticizing the tax system that unfairly allows him to pay a lower tax rate than his secretary. And he is absolutely right. If he were paying the top rate on wages and salaries instead of the super rich benefit rate of 15% on investments ,that would amount to billions more he would be paying the treasury instead of buying up foreclosures with.


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## Jan Pijpelink

Seasoned Oak said:


> And the handfull of people in the 1% who have amassed 99% of this countries wealth largely due to paying 15% tax rate are also among the group able to scoop up property at  fire sale prices after the people who paid on them for  30 years are evicted. Its painfully obvious the system is skewed to the super rich. I more fair system would make a whole lot of millionaires  and not just  few billionaires.



And it is the same everywhere. I lived in 4 countries on 3 continents and it's all the same.


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## sportbikerider78

Seasoned Oak said:


> And the handfull of people in the 1% who have amassed 99% of this countries wealth largely due to paying 15% tax rate are also among the group able to scoop up property at  fire sale prices after the people who paid on them for  30 years are evicted. Its painfully obvious the system is skewed to the super rich. I more fair system would make a whole lot of millionaires  and not just  few billionaires.



In this case the system is a wacked out, corrupt congress and banking system full of crooks.

The solution to fix this problem is not more tax or tax codes, it is less and that naturally levels the playing field w/less corruption.


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## sportbikerider78

Seasoned Oak said:


> Buffet, like him or not, is one of the few people publicly criticizing the tax system that unfairly allows him to pay a lower tax rate than his secretary. And he is absolutely right. If he were paying the top rate on wages and salaries instead of the super rich benefit rate of 15% on investments ,that would amount to billions more he would be paying the treasury instead of buying up foreclosures with.


And that statement just furthers his total hypocrisy.  The IRS will take as many checks as he wants to write.  No one is stopping him from giving it away.  He should speak for himself and not imply others deserve to be taxed more.  Based on what moral code? 

Even then, that means nothing for peoples wages, that is just tax code.  We can't merge these issues as if they are one and the same conversation.

Please don't think I am being argumentative.  This is just how I talk all the time.


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## Seasoned Oak

This is just history repeating itself. Back in the 20s most of this countrys wealth was concentrated in the hands of painfully few people while much of the population lived like rats. An army of servants to the wealthy. Can point to lots of things that turned it around ,but now its headed right back where it began.


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## peakbagger

Warren Buffett has already committed to give away the majority of his fortune when he passes and is major supporter of the move to get ultra rich folks to donate a majority of their wealth when they pass

Folks get the government they deserve and the electorate has sadly fallen for PR tactics.


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## begreen

Seasoned Oak said:


> This is just history repeating itself. Back in the 20s most of this countrys wealth was concentrated in the hands of painfully few people while much of the population lived like rats. An army of servants to the wealthy. Can point to lots of things that turned it around ,but now its headed right back where it began.


Indeed, this also echoes the situation that led up to the great depression of the 1890s.


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## greg13

Unfortunately politicians are allowed to buy votes. mostly uneducated voters just love free handouts like Obama phones ( I knew a person that had one for each of her kids - all under 10 yrs old) . Around here in NY king Andrew  comes into town and tells the people what we need and just passes out money, NY spent $10 mil on a film hub that sits empty (Syracuse will become the Hollywood of the east) . Wanted to spend millions on a Gondola system at the state fairgrounds to shuttle people to the parking lots (for a 10 day a year fair). 

The majority of the young people are stupid enough to think the money for the freebies just magically appears from no where. These are the same people that get a $5000 REFUND on the $1500 they paid in taxes. I still don't under stand how that works, last I knew there was a difference between a refund and a grant.


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## EatenByLimestone

I'm hoping the corruption trial sucks him up.


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## peakbagger

One thing out there that has not been discussed is how accurate is the original contention that folks are not saving enough?. Who decides how much is enough and do they have financial interest in folks keeping large balances?. What retirement lifestyle are they attempting to fund?

When I look at many of the financial calculators they have inherent very conservative assumptions cooked in, its represented they are just looking out for the investor but the reality is the more money you save the more money some investment firm makes. Investment firms love retirement money. Its pretty predictable that it is going to be in the account for quite awhile and the costs to keep the money in that account are pretty minimal compared to the yearly fee they charge. They also know that human nature causes most folks to think they can beat the market long term even though numerous studies show that buy and hold index type mutual funds. The funds make far more money on the buy and sell investor as they get commissions going in and commissions going out plus typically higher yearly expense fees.


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## EatenByLimestone

If you have assets to distribute at the time of death, you saved enough.  At least it seems like that would be an indicator.


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## RobbieB

If you are running calculators, at least you are on a path, you have started a plan.  I ran every one I could find and they said I was good to go so I went.

Where it gets really interesting is when you want to retire really early, say 40's.  Now you have a much longer time to consider and more things can happen (good or bad) to mess with your stash.


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## Seasoned Oak

EatenByLimestone said:


> I'm hoping the corruption trial sucks him up.


Dont you mean "THEM"     Many of the 535  that have been spending us into extinction for 30 years. We keep sending the same people back in just to serve themselves.


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## EatenByLimestone

I was talking about the supreme buffoon in charge of NY.


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## sportbikerider78

Seasoned Oak said:


> This is just history repeating itself. Back in the 20s most of this countrys wealth was concentrated in the hands of painfully few people while much of the population lived like rats. An army of servants to the wealthy. Can point to lots of things that turned it around ,but now its headed right back where it began.


I don't feel like i'm a serf to any rich person.  The wealthy take nothing from me.  I really don't understand where that mentality comes from.  I've lived in many states, held many manufacturing, engineering, sourcing...ect postions. Big corporations.  Private corporations.  Corporations  that went out of business.  If I had a bad position at a crappy company, I left.  I will not complain about a situation when I have complete control over it.  My employment and earning is that type of situation.  

The IRS on the other hand..takes several pounds of flesh. Compound that will local town taxes.....and high school taxes..and high fees..and high car registration..and license fees..and anything I want to do anything fees....
Over 10 years in NYS on a modest home, I have paid almost $65,000 in taxes.  If I stay here another 10, I'm looking at another $65-75k. 

That is a HUGE part of why people can't save enough.  The more you earn, the more you're taxed.  I'm hovering on a tax bracket right now.  Gives me very little incentive to work more.


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## sportbikerider78

Seasoned Oak said:


> Dont you mean "THEM"     Many of the 535  that have been spending us into extinction for 30 years. We keep sending the same people back in just to serve themselves.


No doubt about that.  Almost all dems and repubs agree we gotta spend spend spend spend.  Lobbyists, payoffs, bad contracts...it happens all the time at the local level here.  That is why we have to limit how much can be spent.  Small government with small power can't spend us broke.


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## Seasoned Oak

The tax cuts should have been paired with corresponding spending cuts,but that never happens. Even a freeze in spending would eventually balance the budget ,but it seems the powers that be cant even agree on a cut in the RATE of growth. Technically "were screwed".


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## peakbagger

The US was actually closing in on zeroing out the deficit around the year 2000 under Bill Clinton. Economists were getting worried as the Feds control of the economy was by controlling the interest date on the debt. With far reduced government lending, they could potentially lose control of setting rates. It wasn't until the Bush came in and did another tax cut that the deficit started climbing.

Note the long term debt never got close to zero, only the deficit.


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## Seasoned Oak

Borrowing money to finance tax cuts is smoke an mirrors IMO. Bait and switch.  
Its a Double edge sword Debt bomb. Even if they could possibly get the budget balanced (which they cant). What do you do about the 21Trillion. I cant see a scenario that dont include some type of default or "renegotiation of terms' AKA pennies on the dollar for your treasuries. If we had to live within our means today, we would be in the middle of a greatest depression in history. Double digit negative GDP numbers as far as the eye can see .Putting it off along with more deficit spending will only make it worse.


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## begreen

For those of us that benefited from more reasonable costs, congratulations. But there is a new generation that is saddled with over a trillion dollars of student debt. A crazy rise in housing costs, health insurance costs and god forbid they have a family or a mortgage. This is not the same playing field that we grew up on.


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## Seasoned Oak

Before entering college (or borrowing money for a degree) it should be a requirement to take a class(probably no class like this exists) to research the chances of making a living with said degree, let alone the ability to pay back the loan. The interest rate and likelyhood of approval  should be based on those chances,just like an insurance company. No way should the taxpayers (struggling themselves) be on the hook for others poor financial and educational decisions.


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## sportbikerider78

Seasoned Oak said:


> Before entering college (or borrowing money for a degree) it should be a requirement to take a class(probably no class like this exists) to research the chances of making a living with said degree, let alone the ability to pay back the loan. The interest rate and likelyhood of approval  should be based on those chances,just like an insurance company. No way should the taxpayers (struggling themselves) be on the hook for others poor financial and educational decisions.


I have a friend that is 24, has $65k in loans and makes $11.50 per hr with a 4 year degree from a private liberal arts school.

Quite frankly, if the kid isn't smart enough to pick a degree that makes a sustainable amount of money (aka where they want to be) then they aren't smart enough for college.  All of this info is super available and at your fingertips.  In 10 seconds you can figure out if your degree can be paid off and what you will make.  Maybe some are just fine with being saddled with debt for 20 years.  I was not one of those people.

Good community colleges are readily available.  They have great prices and the credits are easy to transfer in.  Just make sure you have a 4 year school picked out before you start taking classes so you know they will transfer in.  
I graduated from a great private engineering school with almost no loans.  I had ZERO need based scholarships.  I went to a community college for full price and got my AS.  Did well and got a 30% off merit based discount to my 4 year school.  Then worked 6 month and did school 6 months (alternating) with their paid co-op program for the last 3 years.  Worked out great.  Had a job with GE 10 months before I graduated.


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## Seasoned Oak

These loans are TOO easy to get. FIX that before they start talking about loan forgiveness. How much of this money went to finance Spring Break??? They have no idea. The worst thing that can happen is  the student has to pay it back. The average student loan is $25000,  less than the price of a new car. IF you cant buy an economy car with that degree it wasnt worth it to begin with. Is why tuition is so high ,too much easy Govt subsidy money flying in,same as Health Care.


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## greg13

sportbikerider78 said:


> I have a friend that is 24, has $65k in loans and makes $11.50 per hr with a 4 year degree from a private liberal arts school.
> 
> Quite frankly, if the kid isn't smart enough to pick a degree that makes a sustainable amount of money (aka where they want to be) then they aren't smart enough for college.  All of this info is super available and at your fingertips.  In 10 seconds you can figure out if your degree can be paid off and what you will make.  Maybe some are just fine with being saddled with debt for 20 years.  I was not one of those people.
> 
> Good community colleges are readily available.  They have great prices and the credits are easy to transfer in.  Just make sure you have a 4 year school picked out before you start taking classes so you know they will transfer in.
> I graduated from a great private engineering school with almost no loans.  I had ZERO need based scholarships.  I went to a community college for full price and got my AS.  Did well and got a 30% off merit based discount to my 4 year school.  Then worked 6 month and did school 6 months (alternating) with their paid co-op program for the last 3 years.  Worked out great.  Had a job with GE 10 months before I graduated.



Bottom line is that not every kid is cut out for collage so why waste the money on it? There are plenty of FREE and low cost options. I went to BOCES vocational the last three years of high school (1 yr sm engine, and 2 yrs auto mechanic.) The day after I graduated I was running a Goodyear shop. 6 months later I was hired as fleet mechanic for one of the largest tree companies on the east coast. Not bad gigs for a 19 yr. old, If I only knew then what I know now!!
My grandson is in BOCES  now doing home electrical, I hope he sticks with it.


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## sportbikerider78

If I was a really rich guy and had a bunch of money to give away, I would start non profit trade schools.  Kids really need a place where they can be creative, experiment and work with their hands.  You can't work with your hands without working with your mind first.  

In the past, these kids entered big programs that Ford, GM, GE, ect had to offer.  They learned highly skilled trades like machining and toolmaking.  Those programs don't exist much anymore.


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## begreen

We have a decent shop classes locally and Seattle has some good programs in community colleges. The carpentry and marine building programs are excellent as are the welding, culinary arts, and viniculture programs.


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## peakbagger

My experience is that most public high school school systems are run by teachers that went to college, they regard trades training as the place to dump the students who aren't interested in college and the discipline problems. Our local high school had an excellent forestry program, the teacher finally gave up the program as the school kept dumping the discipline problems on him and he was expected to graduate them. Not a good combination of chainsaws and skidders under the control of kids with discipline issues. Trades are the first programs to get cut in a typical school system. Standardized testing tends to encourage the academic track. Luckily larger school systems usually will have one designated complex for trades.

My university program years ago added a two year  engineering technology program in addition to regular engineering program. A studtn could go two years and get a certificate or 4 years and get a BS. They had the option after the first year to switch up to the regular engineering program. U Maine was state school and they supported industry with their program. There were a few years where the ME techs had higher starting salaries then the MEs as the industry in the state needed maintenance planners and foreman and the techs had more practical skills than the MEs did.

After the first job interview it pretty rare if anyone asks or cares what engineering school someone went to., The reality was a degree just meant that we had the technical background but it was sink or swim once hired into a real job. Make it through a couple of years in papermill and after that headhunters started calling us trying to hire us away.


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## greg13

sportbikerider78 said:


> If I was a really rich guy and had a bunch of money to give away, I would start non profit trade schools.  Kids really need a place where they can be creative, experiment and work with their hands.  You can't work with your hands without working with your mind first.
> 
> In the past, these kids entered big programs that Ford, GM, GE, ect had to offer.  They learned highly skilled trades like machining and toolmaking.  Those programs don't exist much anymore.



Most of those programs were offered by large manufacturers, there just are not many left. just in the Syracuse area alone Carrier air conditioners - gone, Fisher body (general motors)- gone, New process gear (Chrysler) - gone. That's over 10,000 jobs gone. Add in the companies that supported the plants and the numbers just keep going up.


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## firefighterjake

Vocational schools are still doing pretty well in my area . . . well, some are . . . the local vocational high school vocational school has changed a lot since I've been teaching there as a guest instructor in the last 23 years and the teachers admit the same.

At one time it was the place where a lot of students went who did not like school . . . there were some students in those programs who could care less about their education and were simply there for the social aspect. 

It didn't help that teachers were often pushing students to go on to a traditional four year college.

Things have changed a lot though.

First off, there is not a "one size fits all" approach to secondary education. Many of the teachers and guidance counselors in the sending schools have seen the light and realize that many students do better with hands on education . . . and many also see the value (not to mention in many cases the bigger paychecks) that can be achieved with a trade school education. There is not the same stigma as there was just 20 or so years ago.

The programs have also evolved with the times and this has had the net result of bringing in many different students who would not have been enrolled in a trade school program at the high school level. Robotics, horticulture, computer design, public safety (law enforcement, EMS and firefighting), video/sound production programs can be found now in the same building as the traditional heavy equipment, small engine, CNA, welding and carpentry classes. In some cases traditional programs have morphed into new programs to take advantage of changing tech and student interest . . . as an example the traditional body shop class now has a much, much larger focus on working with composites such as carbon fiber. 

As the school and programs have evolved, so have the students. As mentioned earlier I don't see anywhere near the same level of apathy or disrespect from today's students. The vast majority want to be in the vocational school. While not all will pursue that trade, I would guess at least 95% have a passion or at the very least were curious about that one particular trade. The instructors have noticed this change as well and as a whole prefer today's students. They tell me that the students they had 20 years ago often knew a lot already about the trade, but many just didn't want to be in school and could care less about passing the class. The students they have today often have to be taught the very basics -- as in how to take measurements with a tape measure, sizes of wrenches, etc. -- but the flip side is they are engaged and want to learn.

Finally, the high school vocational school in the City where I work has the mindset that the high school program may only be but the start of the student's education in the trade. They have a close tie with the local community college (which in itself has partnered with local businesses) so that students enrolling in these college level classes are pretty much guaranteed a job once they graduate in one to four years. As an example, my good friend's son will be graduating after taking a one year class in becoming a wind turbine tech . . . while this may seem to be a very narrow field, I am told that the program also incorporates parts of other renewable energy generators, such as solar, to give him more desirable skills to future employers. The college has also said if he chooses to just stay in wind energy, as of right now he should find employment with no issue.


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## firefighterjake

begreen said:


> We have a decent shop classes locally and Seattle has some good programs in community colleges. The carpentry and marine building programs are excellent as are the welding, culinary arts, and viniculture programs.



Same here. 

The local vocational school consistently sends students to the national Skills USA competitions . . . and they consistently come back with top finishes.

I personally bring most of my small engines -- sleds, ATVs, lawn tractor, chainsaw, etc. -- to the small engine class. The instructor is more than a teacher -- he is a mentor in the purest sense of the word. He has gone to bat for more than one of his students and ended up helping them land their first job in the field. 

One thing he does is to run the class almost like a shop. I mean to say he teaches -- both in the class and on the shop floor -- but it is the students who are responsible for filling out the forms when I bring in my ATV or sled to get fixed, the students work on the stuff and ask him questions and he signs off on their work and it is the students who explain what they did and give me the bill (parts only, no labor). He treats these young men and women as . . . well . . . professional young men and women . . . and it shows.

Now that's not to say he's all business. Typically in the late Winter or early Spring he will drag out his collection of antique snowmobiles and let the students ride around the school grounds with them. It's very neat to see some of the old one-lungers huffing and puffing. He also bought a racing go cart a year or two ago. Students assemble the go cart from the ground up and then get to take it for a spin before disassembling it for the next student. Finally, about every two years he organizes a trip into Canada to see the Skidoo factory and museum in Valcourt with his students.


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## Modenacart

If you want investing advice, just buy Vanguard SP500 index funds.  I am a single income household with two kids and a wife and in 14 years we now have over 600k saved.  We were able to do the IRS max in my 401k about seven years ago and was able to add IRAs for my wife and I about three years ago.  We have never owned a new car and our house has a base square footage of about 1400. We took our first vacation that didn’t revolve around my work travel for the first time three years ago.  

Anyone can save if you want to.  The way I look at it is if the SP500 tanks you need to be buying bullets, salt, and seed.  Gold, and silver will have no value if the economy crashes.  Individual stocks and precious metals are a fools game unless you just like gambling. 


Sent from my iPhone using Tapatalk


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## EatenByLimestone

Not every body should invest in the same thing.   Different people have different risk tolerances, needs, and time lines.   

While the S&P 500 has done really well, somebody who gets an ulcer every time the market corrects should choose investments that are low beta.


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## Modenacart

Then buy CDs and lose money to inflation.  Warren Buffets advise was to buy SP500 and avoid individual stocks.  The SP has earned over seven percent since creation, to include the depression and the “great” recession. 


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## peakbagger

Everyone has a different risk tolerance, there are various quizzes folks can take but the reality if most folks are wired to believe the hype on the news. Cable TV and the internet all all desperate to get "eyeballs" and the way to get them is to make outrageous claims not backed up by any real truth. Investing in stocks need to be the long term, 5 plus years. If you are trying to invest for a shorter term, the investing shifts to gambling. Until an investor has actually gone through an investment cycle of a bear to a bull to bear market and seen the long term gain with lots of "noise" in between its easy to get sucked in by short term doom and gloom or hype. The other thing to realize is that there is no such thing as a "hot tip", 70% of the trades on the markets are computerized instantaneous transactions occurring in faster than blink of the eye that are factoring in any possible news, no way that an individual will ever get a jump on the computers. If its "hot tip" on an individual stock, ignore it and run away, if its truly inside information and someone trades on it, its illegal. Usually the "hot tip" is put out by folks who stand to gain doing something opposite of what they are telling other folks to do. Look up "pump and dump" or just watch the Wolf of Wall Street (a great movie bases on the penny stock market.

I am buy and hold investor of no load mutual funds from Vanguard. Vanguard is the only investment firm not owned by shareholders. Vanguard's shareholders are the owners of the funds, thus there is no incentive for them to crank up the volume to pay a dividend to shareholder. Across the board they generally have the highest ranked funds and lowest expense ratios. Even though its pretty well proven by their founder, Jack Bogle, that index funds held long term is the best investment, they know folks are going to gamble their money trying to beat the market so they do offer managed funds and ETFs so their members don't have to go elsewhere. Remember in every transaction, for everyone that makes money, someone is losing money.

The other long term thing is folks don't realize that inflation eats your money long term so just keeping it in a bank account or CDs means they are losing money long term. The fed has been printing money since the last financial crisis and artificially keeping the inflation rate low for quite a few years and the result was anyone with money in bonds, or CDs which are tied to bonds have had artificially low returns. The only way to keep ahead of bonds is to buy and hold stock based index funds, yes the funds could lose money in the short term (less than 5 years) but in the long run their returns will exceed long term inflation. On the other hand, the worse investments are folks who are in and out of the market listening to the short term doom and gloom as most of the gains  happen quickly and if they are out of the market they miss out.

If someone just cant ignore the news to buy and sell and are paranoid about the future there is already laddering CDs as an approach. There is no risk albeit crappy return that slowly gets eaten by inflation. Note there is risk to bond funds that a lot of folks don't realize, the return on bonds is tied to federal bond rate if the fed rate goes up, the bonds fund value drops as its holding lower interest rate funds. Once a bond fund starts to loose money many folks want to get out of it and that creates an even bigger drain on the fund. There is far less risk buying short term bond funds but lower returns.


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## EatenByLimestone

Bonds would be tricky now.   I'd choose short terms due to rising rates.   But if I expected rates to fall, I'd be trying to stretch out as far as I could.

But there is plenty of money to be made on them.   Buffet himself has proven it.   It's all about the yield and quality of the issuer.  On the issuer, sometimes it's down to the individual project.  One project could fail, while another one is fully funded and at no risk.  (Extra points if you can guess the famous Buffet example I'm referring to.)

I tend to believe the discipline to keep putting money away and living below your means is more important than the investment vehicle.  

Our buy high sell low Morning financial guys on the tv can eat away somebody's savings pretty quickly.  It doesn't take too many cycles of emotional impulsive decisions before a slow and steady 3% CD wins out.


Investing isn't a 1 option wins thing.  There are different ways to win the race.   Diversification is good, and many funds and ETFs provide that at an excellent price.


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## mass_burner

Seasoned Oak said:


> https://www.cnbc.com/2018/03/15/bankrate-65-percent-of-americans-save-little-or-nothing.html.
> 
> This is a topic that deserves discussion and was mentioned in another unrelated thread ,so I thought id start a thread on it. It does NOT need to be political in nature. I see this headline every year.
> I find it ALARMING!!  So it seems we are OK with 65% of the population living out their last years on social services.Since it gets so little discussion and I don't see much in the way of fixes discussed. I think SS is a forced insurance/savings program, a very necessary one as most americans it appears need to be FORCED to save for retirement. Would be nice to be able to opt out but if that were allowed many of the biggest contributors would leave. What say YOU?


I think it's worth the exercise of considering from a philosophical POV. If we are indeed a family and need each other to prosper (someone has to collect the trash, wait tables, repair electrical lines) then why would you want to opt out? 

Sent from my V11 using Tapatalk


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## EatenByLimestone

If I could invest that money on my own, I'm fairly sure I could achieve a higher rate of return than the govt.  There's an entire industry of consultants that figure out the best strategy to claiming social security.  This tells me that many do not even get the most return possible.  

This would give me more funds to pay the utility worker, waitress, bag boy, vacation hotel staff, strippers... really, where ever I wanted to spread my wealth.  I'm convinced I'm the best at spending my own money.  With my desire to spend as much locally my social security contributions could really help snowball growth in the local economy.


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## Seasoned Oak

mass_burner said:


> I think it's worth the exercise of considering from a philosophical POV. If we are indeed a family and need each other to prosper (someone has to collect the trash, wait tables, repair electrical lines) then why would you want to opt out?
> 
> Sent from my V11 using Tapatalk


Personally i do NOT want to opt out. If that were allowed the largest contributors would flee leaving an already underfunded insurance program to fail in freefall. Many of those if not most of those who save nothing for retirement will continue the same course and be 100% dependent on social services for 100% of their after retirement expenses. Living expenses not covered by retirees SS ultimately are all just shifted to another part of the govts liabilities.


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## Seasoned Oak

EatenByLimestone said:


> If I could invest that money on my own, I'm fairly sure I could achieve a higher rate of return than the govt.  There's an entire industry of consultants


 Maybe so ,but what if your own personal pot of gold goes belly up. Many a wealthy investor die penniless. Can happen to anyone. At least you still have the guaranteed minimum SS. So the old ''all your eggs'' in one basket analogy


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## Modenacart

Seasoned Oak said:


> Maybe so ,but what if your own personal pot of gold goes belly up. Many a wealthy investor die penniless. Can happen to anyone. At least you still have the guaranteed minimum SS. So the old ''all your eggs'' in one basket analogy



If the SP500 goes belly up there will be no SS no matter what the government guarantee. 


Sent from my iPhone using Tapatalk


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## Seasoned Oak

peakbagger said:


> someone is losing money.
> 
> The other long term thing is folks don't realize that inflation eats your money long term so just keeping it in a bank account or CDs means they are losing money long term. The fed has been printing money since the last financial crisis and artificially keeping the inflation rate low for quite a few years and the result was anyone with money in bonds, or CDs which are tied to bonds have had artificially low returns.



Interest rates are a double edged sword. Going back to historic interest rates will most likely tank the Govt and the economy quickly. Even a few points of interest rates will make the interest payments on the US debt unsustainable in the short term, not just in the long term. Low rates on bonds and Cds are a small price to pay to keep us afloat. My guess is the Govt will find a way to keep those rates close to where they are now.


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## sportbikerider78

Historic rates for the DOW don't mean squat!  Nothing that has happened is promised to happen.  It is always a gamble and that gamble is based on when you need to retire and what income level you need to have. 

I think that by the time I retire, I will be about half vested in 401k/ect and income properties like rentals.  Even if the value of the retals drops, you still have a good tax write-off and rent coming in. 

This is a really interesting time in history.  For the first time ever, people have most of what they save in an imaginary place, all 1's and 0's, in an electronic world.  Not to long ago, retirements were land and tangible assets.
I think it is a time of great vulnerability.


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## Seasoned Oak

sportbikerider78 said:


> Historic rates for the DOW don't mean squat!  Nothing that has happened is promised to happen.  It is always a gamble and that gamble is based on when you need to retire and what income level you need to have.
> I think that by the time I retire, I will be about half vested in 401k/ect and income properties like rentals.  Even if the value of the retals drops, you still have a good tax write-off and rent coming in.
> 
> .


I was talking about historic INTEREST rates. The interest rate now paid on the National debt is at abnormally low rates.Once these rates adjust back to historic norms the Govt will be bankrupt. Which is why they will have to keep Interest rates low at all costs.Interest on the debt will crowd out all other federal spending. As far as rentals ,100% of my income comes from rentals an purchase contract payments. These will disappear quickly when tenants and buyers lose jobs and income. Rentals are far from bulletproof income. The only bulletproof investment that i can think of is a farm. Ask the amish. Im not sure what to do as i dont have plans to buy or ability to operate a farm.


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## Seasoned Oak

sportbikerider78 said:


> This is a really interesting time in history.  For the first time ever, people have most of what they save in an imaginary place, all 1's and 0's, in an electronic world.  Not to long ago, retirements were land and tangible assets.
> I think it is a time of great vulnerability.


Agree 100%


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## peakbagger

Plenty of farms for sale cheap up my way in Northern Maine. The Amish and Mennonites are moving up there as the available land in PA doesn't support their growth rate. A farm for self sufficiency is one thing, but if its dependent on selling a crop, odds are there is government subsidy hiding in the background. Real estate in general is what s called a ill-liquid investment, when you need the money, it may take a while to to sell or the sales price may have to be discounted. It all come down to balanced portfolio of investments in multiple markets of varying risk. The biggest controllable thing to do is get rid of debt and reduce expenses, everything else has some risk but the long term results are pretty predictable once you start looking at 5 years out.


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## Seasoned Oak

peakbagger said:


> The biggest controllable thing to do is get rid of debt and reduce expenses, everything else has some risk but the long term results are pretty predictable once you start looking at 5 years out.


Iv done that. No paper assets at all. No debt tied to assets.CC debt(unsecured) is not as bad as its not tied to assets although i dont have much of that either anymore.Once the public realizes that their treasuries will NOT ever be paid back (or pennies on the dollar) we will be in uncharted territory. Lots of inflation ahead.


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## sportbikerider78

Seasoned Oak said:


> I was talking about historic INTEREST rates. The interest rate now paid on the National debt is at abnormally low rates.Once these rates adjust back to historic norms the Govt will be bankrupt. Which is why they will have to keep Interest rates low at all costs.Interest on the debt will crowd out all other federal spending. As far as rentals ,100% of my income comes from rentals an purchase contract payments. These will disappear quickly when tenants and buyers lose jobs and income. Rentals are far from bulletproof income. The only bulletproof investment that i can think of is a farm. Ask the amish. Im not sure what to do as i dont have plans to buy or ability to operate a farm.


My post was not in reference to anything you posted...it was just below it.   

Agree.  Nothing is bulletproof. Other than bullets.  They always have value.  LOL


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## sportbikerider78

peakbagger said:


> Plenty of farms for sale cheap up my way in Northern Maine. The Amish and Mennonites are moving up there as the available land in PA doesn't support their growth rate.



That is surprising to me, seeing how it is so cold with such a short season.  Last place I would move to grow anything.  

I think they do lots of cash transactions locally.  They keep most of their business internal and when it is external, it is off the grid.  Not that there is anything wrong with that.


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## Seasoned Oak

sportbikerider78 said:


> My post was not in reference to anything you posted.


I do agree about the DOW. Historic rates mean nothing, with the levels of debt piled up that will never be repaid, we are not in any previous historic situation. If we cant keep the bills paid while borrowing trillions,how will we ever survive while paying those same trillions back with interest.


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## Seasoned Oak

sportbikerider78 said:


> That is surprising to me, seeing how it is so cold with such a short season.  Last place I would move to grow anything.
> 
> I think they do lots of cash transactions locally.  They keep most of their business internal and when it is external, it is off the grid.  Not that there is anything wrong with that.


I guess thats why they are CHEAP.


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## peakbagger

As the earth warms up, farmland up north is going to be in bigger demand .


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## Ashful

Seasoned Oak said:


> Iv done that. No paper assets at all. No debt tied to assets.CC debt(unsecured) is not as bad as its not tied to assets although i dont have much of that either anymore.Once the public realizes that their treasuries will NOT ever be paid back (or pennies on the dollar) we will be in uncharted territory. Lots of inflation ahead.



Inflation is exactly how they’re going to manage those trillion-dollar debts you were discussing two pages back.  De-value it.  You will recoup some of that loss in equity, if you own property.


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## Modenacart

sportbikerider78 said:


> My post was not in reference to anything you posted...it was just below it.
> 
> Agree.  Nothing is bulletproof. Other than bullets.  They always have value.  LOL



If the DOW crashes and doesn’t recover you need bullets, salt, seed and a source of water.  You are fooling yourself if you think anything else will be what matters.  At that point the world as we know will have ended. 


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## EatenByLimestone

sportbikerider78 said:


> That is surprising to me, seeing how it is so cold with such a short season.  Last place I would move to grow anything.
> 
> I think they do lots of cash transactions locally.  They keep most of their business internal and when it is external, it is off the grid.  Not that there is anything wrong with that.




Check out Elliot Coleman.  He has a market farm in Maine and grows all year long.  He's really big into 4 season gardening.  I'm trying to copy some of what he does to extend my growing season here in NY.


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## peakbagger

Madison Maine is the biggest supplier of greenhouse tomatoes in New England. https://www.backyardfarms.com/

 With a competing greenhouse complex being built in Berlin NH this year.


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## EatenByLimestone

peakbagger said:


> Madison Maine is the biggest supplier of greenhouse tomatoes in New England. https://www.backyardfarms.com/
> 
> With a competing greenhouse complex being built in Berlin NH this year.




That's an impressive operation!

I have Hannaford here.  I wonder if I have their tomatoes in the store.


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## Seasoned Oak

Modenacart said:


> If the DOW crashes and doesn’t recover you need bullets, salt, seed and a source of water.  You are fooling yourself if you think anything else will be what matters.  At that point the world as we know will have ended.
> Sent from my iPhone using Tapatalk


Its a shame we are so dependent on that(DOW). Suddenly solar power and roof top water collection are looking good along with some dry bean storage.


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## Seasoned Oak

Ashful said:


> Inflation is exactly how they’re going to manage those trillion-dollar debts you were discussing two pages back.  De-value it.  You will recoup some of that loss in equity, if you own property.


That how i see it. If the dollars value drops 50%, your property is suddenly worth twice as much in dollars but actually still the same. If you only have dollars and paper assets you have lost 50% of its value.


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## Modenacart

Seasoned Oak said:


> Its a shame we are so dependent on that(DOW). Suddenly solar power and roof top water collection are looking good along with some dry bean storage.



I wish I could agree with you on solar but you need to replace batteries every seven years or so.  Manufacturing batteries is a very dangerous business.  I agree it is the future of power generation as a whole, just not for off grid. 


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## Seasoned Oak

Modenacart said:


> I wish I could agree with you on solar but you need to replace batteries every seven years or so.  Manufacturing batteries is a very dangerous business.  I agree it is the future of power generation as a whole, just not for off grid.
> Sent from my iPhone using Tapatalk


If i ever get into solar it would be with grid tie. The power companies are not going away,just be nice not to have a larger bill every month , just another bill to not have to pay.


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## peakbagger

Modenacart said:


> I wish I could agree with you on solar but you need to replace batteries every seven years or so.  Manufacturing batteries is a very dangerous business.  I agree it is the future of power generation as a whole, just not for off grid.
> 
> 
> Sent from my iPhone using Tapatalk



Nickel Iron Batteries (AKA Edison Cells) have no real lifespan if treated properly and if they are abused, they usually can be salvaged, there are some still in operation that are 100 years old. The reasons why folks don't use them is they really are only good for "end of the world" solutions, otherwise they are expensive, heavy, inefficient and thirsty for distilled water. Only certain charge controllers can be set up for them. Worse case is stock the right chemicals away and change the electrolyte every 15 years and the batteries will be around long after most folks have died of all the things they don't die of today due to their being a functional health care system.

On one of the many Alaska based cable shows had one of the featured folks swapping out his batteries and I noticed he had installed Iron Edison Nickel Iron Batteries. I expect the batteries will be around long after he is out of the bush.


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## Modenacart

peakbagger said:


> Nickel Iron Batteries (AKA Edison Cells) have no real lifespan if treated properly and if they are abused, they usually can be salvaged, there are some still in operation that are 100 years old. The reasons why folks don't use them is they really are only good for "end of the world" solutions, otherwise they are expensive, heavy, inefficient and thirsty for distilled water. Only certain charge controllers can be set up for them. Worse case is stock the right chemicals away and change the electrolyte every 15 years and the batteries will be around long after most folks have died of all the things they don't die of today due to their being a functional health care system.
> 
> On one of the many Alaska based cable shows had one of the featured folks swapping out his batteries and I noticed he had installed Iron Edison Nickel Iron Batteries. I expect the batteries will be around long after he is out of the bush.



He never was in the brush.  The show is a scam. 


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## sportbikerider78

Seasoned Oak said:


> Maybe so ,but what if your own personal pot of gold goes belly up. Many a wealthy investor die penniless. Can happen to anyone. At least you still have the guaranteed minimum SS. So the old ''all your eggs'' in one basket analogy


In my mind, a guarantee from the government is worth about as much as a superbowl ticket printed on a cracker.
This is the same government that has to raise the debt ceiling and has run itself down a ski slope of debt with entitlement programs, corporate welfare, and endless war.


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## Ashful

sportbikerider78 said:


> In my mind, a guarantee from the government is worth about as much as a superbowl ticket printed on a cracker.
> This is the same government that has to raise the debt ceiling and has run itself down a ski slope of debt with entitlement programs, corporate welfare, and endless war.



Plenty of room for criticism, but as one who has traveled quite a bit and deals with folks from all over the world, it’s still the best one in the majors.


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## Seasoned Oak

sportbikerider78 said:


> In my mind, a guarantee from the government is worth about as much as a superbowl ticket printed on a cracker. This is the same government that has to raise the debt ceiling and has run itself down a ski slope of debt with entitlement programs, corporate welfare, and endless war.


The odds are good that the SS check will always come in the mail,its just the value of those dollars that are in question. That average check of $1200 a month may just be worth only a few hundred dropping in value quickly as hyper inflation kicks in. Those of us with rentals wont fare much better as people stop paying rents and house pmts as soon as they lose their jobs. As you know, so many live paycheck to paycheck . Think Venezuela on a much bigger scale.


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## mass_burner

SS is capped : Workers will contribute 6.2 percent of their earnings to *Social Security* until their income exceeds $128,700 in *2018*. So higher wage earners aren't significantly encouraged to opt out. You can make the argument that if you make 125k, 100% of your income is subjected; if you make 10 million only 1% is...fair?


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## Modenacart

mass_burner said:


> SS is capped : Workers will contribute 6.2 percent of their earnings to *Social Security* until their income exceeds $128,700 in *2018*. So higher wage earners aren't significantly encouraged to opt out. You can make the argument that if you make 125k, 100% of your income is subjected; if you make 10 million only 1% is...fair?



You collect based on what you contribute, so yes, it is fair. 


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## peakbagger

Its not that simple,  the  SS system is intentionally biased to support lower income workers compared to the higher income workers under the cap. Someone on the low end of the scale gets a higher SS check compared to what they put in the system then a higher wage earner. Politicians like to call it a savings account but its far more ten that, its a social safety net. SS was never intended to be a primary retirement check it was to be enough to keep someone from living with no income. Folks forget before SS there was nothing, anyone lucky to have lived to retirement age long had to depend on whatever resources they might have, their family or charity. This was at the end of the depression and many folks had little or nothing.


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## Seasoned Oak

Lots of variables have changed which will gut the program ,the 2 most drastic ones are:
1.People living much longer.
2.Only a few contributors per retired person as boomers retire.

Another drain is people that never paid anything in such such as immigrants immigrating after retirement age ,though im not sure where that money comes out of, but it adds to the debt no doubt. I know of a few people(immigrants) who brought their parents after they became citizens. The govt makes them(citizens)sign an affidavit of support but certainly dont enforce it at all, so its meaningless.


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## sportbikerider78

Modenacart said:


> You collect based on what you contribute, so yes, it is fair.
> 
> 
> Sent from my iPhone using Tapatalk


If it was fair, it wouldn't have to be forced.


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## begreen

sportbikerider78 said:


> If it was fair, it wouldn't have to be forced.


If that is the case then I guess all taxation is unfair. For instance, is collecting taxes to pay for police and fire protection optional or forced?


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## Seasoned Oak

begreen said:


> If that is the case then I guess all taxation is unfair. For instance, is collecting taxes to pay for police and fire protection optional or forced?


Would be nice to find a way to make those using the majority of police services pay the majority of the cost.


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## sportbikerider78

begreen said:


> If that is the case then I guess all taxation is unfair. For instance, is collecting taxes to pay for police and fire protection optional or forced?


Fire is a service that you will use if you should need it.  One of the may reasons each area doesn't have a big fire department and they rely on mostly donations and volunteers.

I think you misunderstand what police are for.  They are not a protection agency, but rather a law enforcement agency.
Aren't there many, many, many people who do not pay for either fire or police already?  Many departments get their funding through citations, fines and of course, town/city taxes.

If the government mandates that everyone have x,000k/per month in retirement, that doesn't mean it is all of a sudden needed and justified.

If it was a good program, you'd have people wanting in, not out.  Make it voluntary, not forced.


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## Ashful

Meh... this got boring.  Back to the predictable same old arguments.

Me?  Unless something dramatically changes in my life, I’ll never need social security.  But that’s the thing, you can never predict what might dramatically change in your life.  In four short decades I’ve been wealthy, so poor I had to choose between buying heating oil or groceries, and everything between.  Despite living conservatively within my means, who knows where I’ll be when the chips are down?  Those who complain about a safety net can sometimes be humbled by events they did not see coming.

Note, the wealthy do pay less for SS, but they also need it less.  Folks earning under $127k pay 6.2%, but one earning $500k will pay only 1.5%, due to the salary cap at $127k.  So, you have your solution, sportbikerider78, just learn to earn more.

Edit:  I just saw that @mass_burner posted almost the same, above, but with the 2018 numbers.  I’m using 2017 numbers.


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## Seasoned Oak

sportbikerider78 said:


> If it was a good program, you'd have people wanting in, not out.  Make it voluntary, not forced.


You always have to factor in those that have to be forced to save ,which is a huge % considering 65% are not saving enough and approx 30% saving nothing at all. You can say " well then dont support them in retirement" but you know that will never happen. So it has to be somewhat forced.


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## Seasoned Oak

Ashful said:


> one earning $500k will pay only 1.5%, due to the salary cap at $127k.  So, you have your solution, sportbikerider78, just learn to earn more.


Plus those whose earnings are all dividends,interest and capitol gains pay nothing into SS as well as enjoying a special lower tax rate lower than those in the 30%+ brackets getting a W-2  form. But thats another story.


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## sportbikerider78

Ashful said:


> Folks earning under $127k pay 6.2%, but one earning $500k will pay only 1.5%, due to the salary cap at $127k.  So, you have your solution, sportbikerider78, just learn to earn more.


Didn't know I was looking for a solution. 
But that is interesting..not that I have to 'worry' about making that much.


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## EatenByLimestone

begreen said:


> If that is the case then I guess all taxation is unfair. For instance, is collecting taxes to pay for police and fire protection optional or forced?



Since we vote our representatives in, and they in turn decide if a tax stays or goes, I would say they are fair, and not unforced.  Fire insurance, and fire companies used to be private.  If you didn't pay, they'd let your house burn, while protecting your neighbor's house who paid.

Regulatory fees are imposed by unelected officials and therefore unfair imo.


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## sportbikerider78

EatenByLimestone said:


> Since we vote our representatives in, and they in turn decide if a tax stays or goes, I would say they are fair, and not unforced.



Under the limits of the Constitution, I agree.


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## Highbeam

EatenByLimestone said:


> Since we vote our representatives in, and they in turn decide if a tax stays or goes, I would say they are fair, and not unforced.  Fire insurance, and fire companies used to be private.  If you didn't pay, they'd let your house burn, while protecting your neighbor's house who paid.
> 
> Regulatory fees are imposed by unelected officials and therefore unfair imo.



The fire thing still happens. It’s more about funding districts but they’ll watch your house burn. 

I don’t plan to depend on ss but would be happy to accept my fair share to strengthen my position.


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## peakbagger

Not long after college, I assumed that if I got SS it would be bonus and I sure didnt plan on it. I plan to wait as long as possible to claim it if it exists as its an inflation protected annuity (a lot better than TIPS)


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## Ashful

Highbeam said:


> The fire thing still happens. It’s more about funding districts but they’ll watch your house burn.


Time to move.  That would not happen, here.  Volunteer firefighters have a gene that does not permit them to sit and watch someone suffer.


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## begreen

Has anyone read Democracy in Chains? Our presumptions both economic and social are based on the past. What is coming could change that all except for the very wealthiest. 
https://www.rawstory.com/2018/05/meet-economist-behind-one-percents-stealth-takeover-america/


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## sportbikerider78

begreen said:


> Has anyone read Democracy in Chains? Our presumptions both economic and social are based on the past. What is coming could change that all except for the very wealthiest.
> https://www.rawstory.com/2018/05/meet-economist-behind-one-percents-stealth-takeover-america/


I made it to here before I started laughing.

"In 2010, she moved to North Carolina, where a Tea Party-dominated Republican Party got control of both houses of the state legislature and began pushing through a radical program to suppress voter rights, decimate public services, and slash taxes on the wealthy that shocked a state long a beacon of southern moderation."

Then I gave it a second chance...and burst out laughing again..
"time when economist John Maynard Keynes’s ideas about the need for government intervention in markets to protect people from flaws so clearly demonstrated in the Great Depression held sway."

Keynesian failed economic theories are almost everything wrong with the very issue we are discussing, in regards to the devaluation of our currency, manipulation of markets, and crony-capitalism.

There is nothing better for the lower and middle class than a free market system where people are left alone to work hard and keep a very high percentage of what they make.


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## begreen

Did you read the full article or book? Whether one agrees with an economic theory or not it doesn't change the underlying premise. The book is about the Buchanan school and it's eventual influence on the US. Wealth has become concentrated in the hands of a few. Our leadership is now a group of millionaires. Corporate lobbying in all its cloaked disguises can buy influence and even elections easily and it does every minute. This is not democracy. It is a plutocracy. It is getting worse and the back story is that it has been funded by some of the wealthiest with the intent of making it permanent.
http://fortune.com/2017/08/01/wealth-gap-america/


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## Seasoned Oak

I knew when the supreme court allowed corporations to contribute unlimited amounts of money to politicians ,nothing good would come out of that. Power corrupts, but money corrupts just as much.


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## begreen

In our society, money is power. The founding fathers recognized this pitfall and tried to put in safeguards, but when all branches are working for the wealthiest, there are no checks and balances.


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## Seasoned Oak

Ill do my part. 100% of my SS check will be used to spur the economy , for big boy toys, beer and spirits which by the way have a lot f taxes.  
Good times and good friends. I plan to make the best of whatever time i have left.


----------



## Seasoned Oak

begreen said:


> In our society, money is power. The founding fathers recognized this pitfall and tried to put in safeguards, but when all branches are working for the wealthiest, there are no checks and balances.


Thats why they had 90%  tax rate on the super wealthy. While that is excessive IMO now it has flipped to a lower rate than salaries  of 15% or 20% for dividends and capitol gains which are traditionally the income sources for teh super wealthy. This is one of the biggest reason why the wealthy are able to buy up the whole country.


----------



## Ashful

begreen said:


> Wealth has become concentrated in the hands of a few. Our leadership is now a group of millionaires.



You must be kidding.  You are so off base this is laughable.  By estimated net worth, a full 12% of our population is those “evil millionaires” you spend so much time maligning on this forum.  That’s 36 MILLION Americans, not the “wealthy few”.

If you want to stay on this false mantra, at least start using the term “billionaire”, of which there are STILL about 630,000 Americans.

This is the land of prosperity, and you could have very easily been one of those “group of millionaires”.   Very, very easily... if you split that 12% of US population by age demographic, you’ll find a very large fraction of your age peers are millionaires.  I respect anyone’s choices, until they start whining about the choices or circumstances of others in the rear view.


----------



## sportbikerider78

begreen said:


> Did you read the full article or book? Whether one agrees with an economic theory or not it doesn't change the underlying premise. The book is about the Buchanan school and it's eventual influence on the US. Wealth has become concentrated in the hands of a few. Our leadership is now a group of millionaires. Corporate lobbying in all its cloaked disguises can buy influence and even elections easily and it does every minute. This is not democracy. It is a plutocracy. It is getting worse and the back story is that it has been funded by some of the wealthiest with the intent of making it permanent.
> http://fortune.com/2017/08/01/wealth-gap-america/
> View attachment 227251


If you are talking about the disparages of the government elite taking bribes and then using those bribes (through lobbying) to influence elections, policy and taxation, I'm 100% with you.

The best solution is small limited government.  A big government will abuse its power in a big way.  Those lobbyists would have zero power if the government didn't have such a big stick to swing and was invading every area of our life.  Is the problem the lobbyist or the corrupt politician waiting for someone to buy his vote?  Both of course, but this is a chicken and egg situation.


----------



## begreen

We're on the same page there. Lobbyists would have little power if Citizen's United is overturned or eliminated by amendment. And they would have zero power if lobbying was made illegal like they did in Colombia. Unfortunately it took them a long civil war to finally get legislators that would do the right thing.


----------



## CaptSpiff

Seasoned Oak said:


> That's why they had 90%  tax rate on the super wealthy. While that is excessive IMO now it has flipped to a lower rate than salaries  of 15% or 20% for dividends and capitol gains which are traditionally the income sources for the super wealthy. This is one of the biggest reason why the wealthy are able to buy up the whole country.



In reality the effective tax payments for the super wealthy were never close to 90%. That was a false flag.
The wealthy have always had the means to shelter and grow their fortunes.
What is different today is wage stagnation for the mass population, and their excessive assumption of debt.


----------



## Seasoned Oak

CaptSpiff said:


> The wealthy have always had the means to shelter and grow their fortunes.
> .


Thats true but you really cant defend a lower tax rate on dividends and capitol gains. Money you made while sleeping ,to salaries and earned income you bust your butt for. You can try but i just dont see the fairness in that. Other than that i think this country has such a large population of Billionaires and Millionaires precisely because we are well rewarded for creative thinking and hard work ,the opposite being socialism and communism. So thats a good thing. Iv noticed most of the innovation seems to come from this country ,at least starts here before its hijacked.


----------



## EatenByLimestone

Ashful said:


> You must be kidding.  You are so off base this is laughable.  By estimated net worth, a full 12% of our population is those “evil millionaires” you spend so much time maligning on this forum.  That’s 36 MILLION Americans, not the “wealthy few”.
> 
> If you want to stay on this false mantra, at least start using the term “billionaire”, of which there are STILL about 630,000 Americans.
> 
> This is the land of prosperity, and you could have very easily been one of those “group of millionaires”.   Very, very easily... if you split that 12% of US population by age demographic, you’ll find a very large fraction of your age peers are millionaires.  I respect anyone’s choices, until they start whining about the choices or circumstances of others in the rear view.



This post is what I like about Hearth.   There are so many people coming from different angles you never know what will pop up.  Millionaires by age... never thought to look it up.  I'm shocked by what I found.  

https://www.statista.com/statistics/300527/us-millionaires-generation-age/


19% of millionaires are millenials?  The only age demographic that doesn't surprise me is that baby boomers have the highest number of millionaires.  I never would have guessed that the other 3 groups would be roughly equal.


----------



## EatenByLimestone

Seasoned Oak said:


> Thats true but you really cant defend a lower tax rate on dividends and capitol gains. Money you made while sleeping ,to salaries and earned income you bust your butt for. You can try but i just dont see the fairness in that. Other than that i think this country has such a large population of Billionaires and Millionaires precisely because we are well rewarded for creative thinking and hard work ,the opposite being socialism and communism. So thats a good thing. Iv noticed most of the innovation seems to come from this country ,at least starts here before its hijacked.




I'd be in favor of a flat tax.  Income tax would be simple.   Income from all sources * X%=  pay this amount.  No deductions.   Taxes paid on fair value of any welfare received too.


----------



## EatenByLimestone

CaptSpiff said:


> In reality the effective tax payments for the super wealthy were never close to 90%. That was a false flag.
> The wealthy have always had the means to shelter and grow their fortunes.
> What is different today is wage stagnation for the mass population, and their excessive assumption of debt.




I've always heard the phrase wage stagnation.  It seems like the idea of job hopping would beat that.  I'd assume the hop entailed a raise.


----------



## BrotherBart

Seasoned Oak said:


> Thats true but you really cant defend a lower tax rate on dividends and capitol gains.



Keep your wood splitting fingers off of my dividends and cap gains. Old people gotta eat. And butt was busted to buy those shares.


----------



## Seasoned Oak

BrotherBart said:


> Keep your wood splitting fingers off of my dividends and cap gains. Old people gotta eat. And butt was busted to buy those shares.


Ha ha BB It s pretty easy to level the playing field. All they need is a floor for the special low grandma  rate of, say the first 10K at the low rate ,everything over that gets the same rate as everyone else,s(salaries,wages) So the Warren Buffets of the world pay the same rate on the lions share of their income as you an i. As always your only taxed on NEW INCOME not your principal which you busted butt for.


----------



## Seasoned Oak

EatenByLimestone said:


> I've always heard the phrase wage stagnation.  It seems like the idea of job hopping would beat that.  I'd assume the hop entailed a raise.


People set their own wage. If your job is going nowhere, thats where it will take you, upgrade!


----------



## sportbikerider78

Seasoned Oak said:


> Thats true but you really cant defend a lower tax rate on dividends and capitol gains. Money you made while sleeping ,to salaries and earned income you bust your butt for. You can try but i just dont see the fairness in that.
> .


Simple solution.  Lower the income tax as well.  It is ridiculous.  

Before I had kids and my wife became a stay at home mom, my wife and had high combined salaries.  We both got decent bonuses that year as well.  I paid more in tax that year then I made as an entry level engineer.


----------



## sportbikerider78

Seasoned Oak said:


> People set their own wage. If your job is going nowhere, thats where it will take you, upgrade!


Agreed.  
I have done it and it takes a TON of effort, but it is rewarding.  I personally like change, so it fits my disposition.  

I heard one time "you are getting paid exactly what you are worth".  Hard to argue with that.


----------



## BrotherBart

sportbikerider78 said:


> Agreed.
> 
> I heard one time "you are getting paid exactly what you are worth".  Hard to argue with that.



A few times I have said "I am worth twice what I am getting paid but what they have me doing is worth half of what I am getting paid."


----------



## EatenByLimestone

Maybe it's easier to blame others than clear a new road?


----------



## Seasoned Oak

sportbikerider78 said:


> Simple solution.  Lower the income tax as well.  It is ridiculous.
> 
> Before I had kids and my wife became a stay at home mom, my wife and had high combined salaries.  We both got decent bonuses that year as well.  I paid more in tax that year then I made as an entry level engineer.


Hasnt that been lowered recently ? Perhaps if we didnt have sweeheart deals for protected classes of income it could all be the same. Lowering any taxes while running deficits make no sense either. I prefer freezing spending until the deficits disappear.


----------



## begreen

Seasoned Oak said:


> Hasnt that been lowered recently? Perhaps if we didnt have sweeheart deals for protected classes of income it could all be the same. Lowering any taxes while running deficits make no sense either. I prefer freezing spending until the deficits disappear.


----------



## Ashful

begreen said:


> View attachment 227285


When looking at that graph, you must remember that median household income has increased by roughly 10x since the 1940’s.  Someone making $100k in WW2 would have typically had a net worth over $10M in today’s dollars, making the 90% tax rate a little more understandable.  These are the folks at which the alternative minimum tax was originally aimed, which was then unfortunately left unadjusted for decades, until it was affecting a much larger fraction of the population than ever intended by its original proponents.


----------



## CaptSpiff

Seasoned Oak said:


> Ha ha BB It s pretty easy to level the playing field. All they need is a floor for the special low grandma  rate of, say the first 10K at the low rate ,everything over that gets the same rate as everyone else,s(salaries,wages) So the Warren Buffets of the world pay the same rate on the lions share of their income as you an i. As always your only taxed on NEW INCOME not your principal which you busted butt for.



Except when you die, then they want 50% of your principal as well.

I have been a fan of a flat tax since college days, thought we were close this time. All my reading puts that number between 17 and 22% rate. I would expect that your "grandma" provision would probably be more like 10-15K per adult and 5-8K per dependent. Everything there after is on the table including pensions & benefits. Yup, I'm talking my Cadillac health and drug plan benefits too. If measurable value was transferred into your control, it's a taxable event.

The govt still gets to play with stimulus provisions, but they take the form of post tax incentives.

Now, lets talk about forward looking losses.


----------



## sportbikerider78

Seasoned Oak said:


> Hasnt that been lowered recently ? Perhaps if we didnt have sweeheart deals for protected classes of income it could all be the same. Lowering any taxes while running deficits make no sense either. I prefer freezing spending until the deficits disappear.


So far..zero success with that.


----------



## sportbikerider78

begreen said:


> View attachment 227285



Here is the top bracket adjusted for inflation, if anyone is interested.




In addition to what has been posted by Ashful, was there a big property tax, state income tax, sales tax, FICA, ect back then?

I think you guys are also very much confusing what a "marginal tax rate" and "effective tax rate" are.  Let's take 1955.  Top 1% means that you need to earn $3,425,766 when adjusted for inflation.  you are only paying that super high rate on your taxes on the money you made OVER $3,425,766, not below it..that's your effective tax rate, even though your marginal tax rate might be 90%.

Let's take an example from today.  This part is a copy and paste because I couldn't say it as well.

The first of many reasons that this was the case is that we need to look at the effective tax rate, not the top marginal tax rate. So for example, if I make $20,000, I owe 10 percent under today’s tax code, but only on any income over $18,450 (filing jointly). So I only owe 10 percent of $1550, or $155. Yes, my marginal tax rate may be 10 percent, but my effective tax rate is 0.78 percent.

If you look at taxes vs. GDP since the 50's, it has been about 17-20% every year, regardless of tax law changes.  Take it for what it is worth.  This does not take into consideration the additional local taxes and fines that have been created since then and (in some cases) represent a big tax burden locally.


----------



## Ashful

sportbikerider78 said:


> Here is the top bracket adjusted for inflation, if anyone is interested.
> 
> View attachment 227323
> 
> 
> In addition to what has been posted by Ashful, was there a big property tax, state income tax, sales tax, FICA, ect back then?
> 
> I think you guys are also very much confusing what a "marginal tax rate" and "effective tax rate" are.  Let's take 1955.  Top 1% means that you need to earn $3,425,766 when adjusted for inflation.  you are only paying that super high rate on your taxes on the money you made OVER $3,425,766, not below it..that's your effective tax rate, even though your marginal tax rate might be 90%.



Thank you for posting that.  At least we can now say there is one honest and accurate post in this whole thread without an obvious political slant.


----------



## Ashful

CaptSpiff said:


> Except when you die, then they want 50% of your principal as well.



Say... what?  Hilarys proposed “death tax” of 45% - 65% was voted down in 2016.  It is currently only 40% on any amount over $5.49 million, those being under that threshold being exempt from all federal estate and gift taxes.

The only way the gub’ment is touching your principle when you die, assuming you’re below that threshold, is if you’re so careless and irresponsible as to die intestate.  Of course, it’s not typically folks worth more than $5.49M who are dying with no will.

The ones getting royally screwed in this current program are the hard working folks who had some successs with starting their own business, such as successful restaurant owners, entrepreneurs, and farmers.  They might get up into that net worth $5.5M  territory, esp. with their property equity (farmers), and find themselves in a situation where their net worth is growing at a rate that exceeds their ability to gift it to their children prior to death ($17k per giver per receiver, if I recall).  In this situation, the family can literally lose the farm, when the kids don’t have the capital to pay 40% tax bill on that transfer.  This has happened numerous times over the last two dozen years, in my own family, and is the reason I’m not currently living in a house that has been in my family since the 1690’s.


----------



## venator260

Ashful said:


> Say... what?  Hilarys proposed “death tax” of 45% - 65% was voted down in 2016.  It is currently only 40% on any amount over $5.49 million, those being under that threshold being exempt from all federal estate and gift taxes.
> 
> The only way the gub’ment is touching your principle when you die, assuming you’re below that threshold, is if you’re so careless and irresponsible as to die intestate.  Of course, it’s not typically folks worth more than $5.49M who are dying with no will.
> 
> The ones getting royally screwed in this current program are the hard working folks who had some successs with starting their own business, such as successful restaurant owners, entrepreneurs, and farmers.  They might get up into that net worth $5.5M  territory, esp. with their property equity (farmers), and find themselves in a situation where their net worth is growing at a rate that exceeds their ability to gift it to their children prior to death ($17k per giver per receiver, if I recall).  In this situation, the family can literally lose the farm, when the kids don’t have the capital to pay 40% tax bill on that transfer.  This has happened numerous times over the last two dozen years, in my own family, and is the reason I’m not currently living in a house that has been in my family since the 1690’s.




Can one still do the sell it for a dollar trick? Toward the end of his life, my grandfather did that with several pieces of property. It was not in the millions; more like a couple hundred thousand in fair market value, but more than the 17K per person limit also.


----------



## venator260

sportbikerider78 said:


> Here is the top bracket adjusted for inflation, if anyone is interested.
> 
> View attachment 227323
> 
> 
> In addition to what has been posted by Ashful, was there a big property tax, state income tax, sales tax, FICA, ect back then?
> 
> I think you guys are also very much confusing what a "marginal tax rate" and "effective tax rate" are.  Let's take 1955.  Top 1% means that you need to earn $3,425,766 when adjusted for inflation.  you are only paying that super high rate on your taxes on the money you made OVER $3,425,766, not below it..that's your effective tax rate, even though your marginal tax rate might be 90%.
> 
> Let's take an example from today.  This part is a copy and paste because I couldn't say it as well.
> 
> The first of many reasons that this was the case is that we need to look at the effective tax rate, not the top marginal tax rate. So for example, if I make $20,000, I owe 10 percent under today’s tax code, but only on any income over $18,450 (filing jointly). So I only owe 10 percent of $1550, or $155. Yes, my marginal tax rate may be 10 percent, but my effective tax rate is 0.78 percent.
> 
> If you look at taxes vs. GDP since the 50's, it has been about 17-20% every year, regardless of tax law changes.  Take it for what it is worth.  This does not take into consideration the additional local taxes and fines that have been created since then and (in some cases) represent a big tax burden locally.




Thanks. 

Many people do not understand marginal vs. effective tax rates. I've lost count of the number of times I've had to draw a chart to explain how getting into the next higher tax bracket will not reduce your overall take home pay. At one job, I sat down with 4-5 people and a paystub from a paycheck with a large amount of overtime and a paycheck with no overtime to prove that the percentage of federal tax taken from each was the same.


----------



## Seasoned Oak

venator260 said:


> Can one still do the sell it for a dollar trick?.


 Have to be careful with that one .If your going to divest to your kids you've got to do it long before you pass. Theres a time limit they can go back on.


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## EatenByLimestone

Either 3 or 5 years iirc.


----------



## venator260

Seasoned Oak said:


> Have to be careful with that one .If your going to divest to your kids you've got to do it long before you pass. Theres a time limit they can go back on.




For us in the situation that we were in, the number of years was 3. The laws may have changed or vary by state; that was around 15 years ago.


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## kennyp2339

I just wrote an easement for work, the deed I had had the grantor as the father and the son as the grantee, sale of $, made in 2017, point being, this still occurs


----------



## venator260

kennyp2339 said:


> I just wrote an easement for work, the deed I had had the grantor as the father and the son as the grantee, sale of $, made in 2017, point being, this still occurs




I know that it still occurs, as I bought the house I'm living in for a dollar. The reason for that is because one is not able to give property away, it was my mother's, obtained as a result of the transactions made by my grandfather mentioned above. But I thought perhaps the rules were different for multi-million dollar properties than they were for a 1950's 4 bedroom that needed a good bit of work.


----------



## Seasoned Oak

You can buy or sell a property off a stranger for $1 if you want but the local tax bureau has a fix for that when it comes to collecting transfer taxes .They get 1% from the buyer and same from the seller. The lowest allowable sales price for tax purposes is the assessed value. Usually a better deal for buyers and sellers around here as its been quite awhile since properties were reassessed. If a bank loan is involved adjusting the sales price is not an option.


----------



## EatenByLimestone

venator260 said:


> I know that it still occurs, as I bought the house I'm living in for a dollar. The reason for that is because one is not able to give property away, it was my mother's, obtained as a result of the transactions made by my grandfather mentioned above. But I thought perhaps the rules were different for multi-million dollar properties than they were for a 1950's 4 bedroom that needed a good bit of work.



"Needing a good bit of work" is probably relative.  We may consider that to be rewiring, plumbing, roof, etc.  A multi million dollar property owner may think that if the new house needs it's own bowling alley.


----------



## venator260

Seasoned Oak said:


> You can buy or sell a property off a stranger for $1 if you want but the local tax bureau has a fix for that when it comes to collecting transfer taxes .They get 1% from the buyer and same from the seller. The lowest allowable sales price for tax purposes is the assessed value. Usually a better deal for buyers and sellers around here as its been quite awhile since properties were reassessed. If a bank loan is involved adjusting the sales price is not an option.




Hm...

The above was completed in late 2016. No local tax collectors threw a fit, at least not that I heard about. We promptly got a home equity loan, as the septic was, according to the local authorities alerted when we completed a subdivision, in need of a complete replacement. The house also needed windows, we wanted siding, and had some debt to consolidate. The bank had no issues after it was clear that we were able to occupy the property in the interim, and that the septic issue would be fixed in a way that kept the local inspector happy.


----------



## venator260

EatenByLimestone said:


> "Needing a good bit of work" is probably relative.  We may consider that to be rewiring, plumbing, roof, etc.  A multi million dollar property owner may think that if the new house needs it's own bowling alley.




I suppose you are right. My house needed a good bit of work according to the common man, all of the plumbing, new septic system, siding was dated, and the single pane windows were in rough shape. The electric panel died in the first 6 months, and my grandmother, God bless her, put red carpeting in that had faded to a burnt orange during it's 35 year life. The bathroom had no shower, three layers of flooring, and black and pink tiling on the walls. The chimney liner failed during the first year too. And the kitchen... 

well, you get the idea.


----------



## kennyp2339

Think it’s a local laws then, I know in my area our land w/ improvements are assessed much higher than the going market price. 
Tax office doesn’t care what you buy the property for, they only care who pays the current tax bill, and they really care when that current bill is challenged by private appraisal, usually takes a year and a couple court dates to get your property reassessed to a more fair price.


----------



## peakbagger

kennyp2339 said:


> I just wrote an easement for work, the deed I had had the grantor as the father and the son as the grantee, sale of $, made in 2017, point being, this still occurs



Estate planning is a very tricky and complex thing. I have a 2" thick book of planning estates written by a lawyer for lawyers doing estate planning.

Plenty of "free" seminars at the local Holiday Inn for planning seminars offered by lawyers. Anyone who goes to one gets a high pressure sales effort to pay for the privilege of stripping themselves or their parents of any asset and put them on "old peoples welfare", Medicaid. About the only thing they can take with them is prepaid burial insurance. With some luck one spouse can stay in the family home while the other one goes in a home but usually the state has the spouse living in the home sign it over to the state when the spouse in the home goes on Medicaid. There can be no binding legal attachments on the folks who get the parents assets, once they are handed over they can do what they want with them. Hopefully the benefactors were raised well and will use the transferred assets to take care of their parents but some folks figure out why not dump them on the state?. 

The sad part is most states underreimburse nursing homes for Medicaid substantially, the facilities cannot operate solely on Medicaid patients, those that do have to cut a lot of corners or go out of business. Those residents on Medicaid are allowed to keep $40 a month for personal items and that includes personal items like diapers. Some states and counties try to give the residents a respectful old age but many do not.

The other thing rapidly coming to the fore is filial responsibility laws. Some states are dusting off the old laws and some are writing new ones. Pretty simply the state can go after the children of folks on Medicaid.


----------



## kennyp2339

peakbagger said:


> Estate planning is a very tricky and complex thing. I have a 2" thick book of planning estates written by a lawyer for lawyers doing estate planning.
> 
> Plenty of "free" seminars at the local Holiday Inn for planning seminars offered by lawyers. Anyone who goes to one gets a high pressure sales effort to pay for the privilege of stripping themselves or their parents of any asset and put them on "old peoples welfare", Medicaid. About the only thing they can take with them is prepaid burial insurance. With some luck one spouse can stay in the family home while the other one goes in a home but usually the state has the spouse living in the home sign it over to the state when the spouse in the home goes on Medicaid. There can be no binding legal attachments on the folks who get the parents assets, once they are handed over they can do what they want with them. Hopefully the benefactors were raised well and will use the transferred assets to take care of their parents but some folks figure out why not dump them on the state?.
> 
> The sad part is most states underreimburse nursing homes for Medicaid substantially, the facilities cannot operate solely on Medicaid patients, those that do have to cut a lot of corners or go out of business. Those residents on Medicaid are allowed to keep $40 a month for personal items and that includes personal items like diapers. Some states and counties try to give the residents a respectful old age but many do not.
> 
> The other thing rapidly coming to the fore is filial responsibility laws. Some states are dusting off the old laws and some are writing new ones. Pretty simply the state can go after the children of folks on Medicaid.


I think your reply has just helped a ton of us with planning, Many of us (almost all) will be forced into Medicaid in our later years, luckily for me if I do need long term care the state fire fighters association will cover everything without tapping into personal assets, that's the one great perk of being a exempt volunteer in NJ.


----------



## Modenacart

peakbagger said:


> The other thing rapidly coming to the fore is filial responsibility laws. Some states are dusting off the old laws and some are writing new ones. Pretty simply the state can go after the children of folks on Medicaid.



The state can only collect from the estate of your parents not the children.  The estate pays all bills before the children can collect.  If the estate is not large enough then the collectors are out of luck.  They will try to get the children to pay but they don’t have to.  If states pass laws to change this, expect it to go to the Supreme Court. 


Sent from my iPhone using Tapatalk


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## peakbagger

Be careful to check on what you post. Filial responsibility laws can kick in long before there is estate to worry about

http://graphics8.nytimes.com/packages/pdf/health/NOA/30states.pdf

Looks like North Carolina has a Filial responsibility law. Whether they care to enforce it is another story. 

For profit nursing homes dont allow residents to run up bills, they make sure that either its private pay on the state pays via medicaid.


----------



## Modenacart

peakbagger said:


> Be careful to check on what you post. Filial responsibility laws can kick in long before there is estate to worry about
> 
> http://graphics8.nytimes.com/packages/pdf/health/NOA/30states.pdf
> 
> Looks like North Carolina has a Filial responsibility law. Whether they care to enforce it is another story.
> 
> For profit nursing homes dont allow residents to run up bills, they make sure that either its private pay on the state pays via medicaid.



The way that reads is in the present tense, the parents still alive.  


Sent from my iPhone using Tapatalk


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## EatenByLimestone




----------



## sportbikerider78

Seasoned Oak said:


> Have to be careful with that one .If your going to divest to your kids you've got to do it long before you pass. Theres a time limit they can go back on.


This is a good reason not to have all of your assets in property and cash/investments.  There are many ways you can pass wealth w/o anyone knowing.  Worth thinking about as you retire and age w/kids.


----------



## Ashful

sportbikerider78 said:


> This is a good reason not to have all of your assets in property and cash/investments.  There are many ways you can pass wealth w/o anyone knowing.  Worth thinking about as you retire and age w/kids.



Please elaborate.  And by “wealth”, I assume you’re talking about more than the $68k per year a pair of parents can gift to child and spouse without hitting quotas.


----------



## sportbikerider78

Ashful said:


> Please elaborate.  And by “wealth”, I assume you’re talking about more than the $68k per year a pair of parents can gift to child and spouse without hitting quotas.



I am saying that you can keep anything of value "off the books" so as not to impact any sort of max value you can gift to anyone.  

Would that child not have to report that as income?


----------



## Ashful

sportbikerider78 said:


> I am saying that you can keep anything of value "off the books" so as not to impact any sort of max value you can gift to anyone.
> 
> Would that child not have to report that as income?



Gifts are reported, but as long as you stay below quotas, do not become taxable.  And my math was off a bit, I just checked it, and it’s $14k per parent per child, not the $17k I used above.  Mixing up the 401k contribution limit with the gift limit, my fault.

The better news is that in December, Trump approved an increase in the estate limit, from $5M to $10M.  This still leaves 1.5% of US households in the cross-hairs, but it’s still much better than the prior limit affecting more than 4% of the population, and waaayyy better than the reduced limits Hilary had listed as item #2 on her agenda.

We all attach our own ethics to these things, based on where we land on the spectrum, but Hilary’s proposal to reduce the death tax to $3.5M would have affected a lot of hard-working self-made folks who managed to build a successful business for their family.  By taking it from $5M to $10M, we have managed to spare most of that class, pushing a bit more toward the rarefied air of “old money” estates.

What’s interesting is how this will scale with time.  The Alternative Minimum Tax (and it’s predecessors) were not indexed to inflation from their inception 50 years ago, until 2013.  This turned a tax aimed at millionaires (the upper 0.1% crowd in the 1960’s) into something affecting an ever-increasing number of middle-income households.  I fear the same thing happening with the death tax, as $5M may not mean so much 20-30 years from today.


----------



## Modenacart

Ashful said:


> Gifts are reported, but as long as you stay below quotas, do not become taxable.  And my math was off a bit, I just checked it, and it’s $14k per parent per child, not the $17k I used above.  Mixing up the 401k contribution limit with the gift limit, my fault.
> 
> The better news is that in December, Trump approved an increase in the estate limit, from $5M to $10M.  This still leaves 1.5% of US households in the cross-hairs, but it’s still much better than the prior limit affecting more than 4% of the population, and waaayyy better than the reduced limits Hilary had listed as item #2 on her agenda.
> 
> We all attach our own ethics to these things, based on where we land on the spectrum, but Hilary’s proposal to reduce the death tax to $3.5M would have affected a lot of hard-working self-made folks who managed to build a successful business for their family.  By taking it from $5M to $10M, we have managed to spare most of that class, pushing a bit more toward the rarefied air of “old money” estates.
> 
> What’s interesting is how this will scale with time.  The Alternative Minimum Tax (and it’s predecessors) were not indexed to inflation from their inception 50 years ago, until 2013.  This turned a tax aimed at millionaires (the upper 0.1% crowd in the 1960’s) into something affecting an ever-increasing number of middle-income households.  I fear the same thing happening with the death tax, as $5M may not mean so much 20-30 years from today.



At 3.5 million you are talking about the top 3-4 percent of all Americans.  That is hardly “common” folk or middle class.  Don’t get me wrong, I plan on being over that at retirement but 10 million as the threshold is the top 1 percent and is very generous and benefits almost no one. 


Sent from my iPhone using Tapatalk


----------



## Ashful

Modenacart said:


> At 3.5 million you are talking about the top 3-4 percent of all Americans.  That is hardly “common” folk or middle class.  Don’t get me wrong, I plan on being over that at retirement but 10 million as the threshold is the top 1 percent and is very generous and benefits almost no one.
> 
> 
> Sent from my iPhone using Tapatalk


You and I have very different definitions of “almost no one”.  Raising it from $5M to $10M takes it from the 3.5 percentile up to the 1 percentile level.  That is saving maybe 7.5 million Americans from paying the “death tax”.  These folks are overwhelmingly those hard-working self-made folks I mentioned in an earlier thread, such as doctors, restaurant owners, farmers, small business entrepreneurs, and anyone else who has worked hard to make a nice living for their family.  You begrudge them for wanting to keep what they busted their ass to make, just because others didn’t do the same?


----------



## Modenacart

Ashful said:


> You and I have very different definitions of “almost no one”.  Raising it from $5M to $10M takes it from the 3.5 percentile up to the 1 percentile level.  That is saving maybe 7.5 million Americans from paying the “death tax”.  These folks are overwhelmingly those hard-working self-made folks I mentioned in an earlier thread, such as doctors, restaurant owners, farmers, small business entrepreneurs, and anyone else who has worked hard to make a nice living for their family.  You begrudge them for wanting to keep what they busted their ass to make, just because others didn’t do the same?



I am not begrudging anyone.  I came from nothing and have more than I need.  The idea that the 1 percent is self made is not true in the slightest.  I would love if we got rid of all tax cuts and paid nothing but a percent of all of our income no matter where it came. Oh wait, the top earners wouldn’t like that because their percent would be almost nothing as a percent of their income.  The people that pay almost all the taxes as a percent is the true middle and upper middle class which does not include the top five percent.   If you want to talk flat tax, I am game but the top earners don’t want it because they would have to pay far more in taxes than they do now. 


Sent from my iPhone using Tapatalk


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## Ashful

Modenacart said:


> I am not begrudging anyone.  I came from nothing and have more than I need.  The idea that the 1 percent is self made is not true in the slightest.


I agree, many 1%'ers are not self-made, but I wasn't talking about them.  I was talking about the 3%'ers who have been recently relieved of this atrocity.  I thought that was pretty clear, but I apologize if it was not.

I completely agree on flat tax, it would benefit me enormously.


----------



## sportbikerider78

I agree with a flat income tax.  0% is flat, right?


----------



## jharkin

Wow… I go away for a year and it seems I missed all the fun. Is the ‘can back?

I read though the first 5-6 pages in detail but then zoned out.  Even though we differ philosophically, as usual I agree with Ashful’s  base conclusion: yet another round rehashing the same old arguments we have heard here over and over.

The problem is… A lot of the arguments in this thread are based off common misunderstandings of some of the fundamentals, so even though this is going to take me a bit of time I am going to spend some time point out a few things and giving you guys links to more detailed study.

I know some are going to call me a troll for some of this, but I really don’t care and it makes the discussion more productive for those who follow to reset a few things with corrected information. And especially help people who want to get on track for retirement get the right information.

This is going to be long,  spent some time over the weekend prepping it and breaking it up into multiple posts….  Here goes.





begreen said:


> I concur. This book should be required reading for all high school seniors -
> 
> https://www.amazon.com/dp/0140167153/?tag=hearthamazon-20




The very first thing that would benefit a lot of folks is reading to get a better foundation in personal finance.   The book above is good, as are a few others…


Anything by Jack Bogle, especially his _Little book of common sense investing_ or if you have the appetite for a deep read _Common Sense on Mutual Funds_.
The books put out by the Jack Bogle fan club, i.e. _The Bogleheads Guide to Investing, The Bogleheads Guide to Retirement Planning._
Burton Malkiel’s _A Random Walk Down Wall St_
Stanley and Danko’s _The Millionaire Next Door_
Rick Ferri ‘s  _All about Asset Allocation_
Anything by Warren Buffett
A nice organized list with Amazon links is here  https://www.bogleheads.org/RecommendedReading.php





Highbeam said:


> Dave Ramsey is good for beginners but mr money moustache is where the real stuff is.




Notice a trend in my recommendations above that there is nothing in there from over hyped pundits like Rich Dad Poor Dad, Dave Ramsey, Mad Money Jim Cramer etc.  Those people do nothing but get you in trouble.

Dave Ramsey’s material on debt is good IF you have a problem with too much  debt.  But the rest of his advice, especially on investing is downright dangerous and set up to make profits for the wealth advisors he promotes.

Mr. Money Moustache has a good message on LBYM.. but like all those FIRE bloggers (Mad FIenntist, GoCurryCracker, and so on)  he has a serious blind spot to the real reason his method works:  he isn’t “retired”  he is *self employed* with 6 figures worth of annual income from his blog and contracting gigs. Without that blog income most of these folks are just one recession away from total ruin, trying to live 60-70 years based on rules of thumb designed for a 25 year, SS supported retirement (the Trinity Study)

If you want to read financial blogs there are some good ones, just be vigilant for claims that are too good to be true and methods that only work for them because they have blog income. Some that ARE worth your precious free time are https://www.bogleheads.org, https://thefinancebuff.com/, https://www.whitecoatinvestor.com/, https://jlcollinsnh.com/, etc

For those just starting to make sense of it all – you will see thought this thread there are a lot of fans of Vanguard and Jock Bogle. There is good reason for that as “Saint Jack” has done more to help us everyday investors than anyone else in the industry.  But his methods cover a lot more than the couple of soundbytes in this thread.   If you are ready to learn, a good place to dive in is here:

https://www.bogleheads.org/wiki/Getting_started



Next part coming up…


----------



## jharkin

Part 2 – On Investing

Lots of commentary about investing approaches came up. There are a couple that I want to tackle briefly.




kennyp2339 said:


> I'm being open here, not to gloat or tout my whistle, but to get input, am I balanced here, or is there work needed to be done.



Kenny you are doing great, and if this stuff really interests you you might want to go though the material I linked and get involved in a finance forum.  I strongly recommend   https://www.bogleheads.org/forum/index.php

You can sign up, and make a post asking for advice on next steps.    Be away however that place can be a little intimidating, being investment focused the audience self select for folks with deep knowledge and a lot of assets so get ready to drink from the fire hose.




Modenacart said:


> If you want investing advice, just buy Vanguard SP500 index funds.  I am a single income household with two kids and a wife and in 14 years we now have over 600k saved.  We were able to do the IRS max in my 401k about seven years ago and was able to add IRAs for my wife and I about three years ago.  We have never owned a new car and our house has a base square footage of about 1400. We took our first vacation that didn’t revolve around my work travel for the first time three years ago.
> 
> 
> Anyone can save if you want to.  The way I look at it is if the SP500 tanks you need to be buying bullets, salt, and seed.  Gold, and silver will have no value if the economy crashes.  Individual stocks and precious metals are a fools game unless you just like gambling.



Wow…   where to begin.  You caught one small piece of Jack Bogles message but took it out of context.  The idea was never “just put all your money in the S&P” The actual message was:

Cost matters

A long term buy and hold passive approach beats actively chasing returns

Costs matter

And did I mention costs?

The S&P was chosen for the first index fund because it was the most  well known index that everything else gets compared to. But it can lose at times …  sometimes loose big.  If you keep all your money in the S&P you open yourself up to massive _sequence of returns risk _if you retire right into a period like 2008 or the great depression and need to pull money out at the bottom.

The answer to this as peakbagger and EBL hinted at is diversification and an asset allocation that fits your risk profile. Jack himself addressed this with his famous _age in bonds_ glide path… that basically says as you get older you shift more money into bonds and fixed income to reduce volatility and provide an income stream.

https://www.bogleheads.org/wiki/Asset_allocation



Speaking of Peakbaggers comments he made some great ones worth repeating:



peakbagger said:


> Everyone has a different risk tolerance, there are various quizzes folks can take but the reality if most folks are wired to believe the hype on the news. Cable TV and the internet all all desperate to get "eyeballs" and the way to get them is to make outrageous claims not backed up by any real truth. Investing in stocks need to be the long term, 5 plus years. If you are trying to invest for a shorter term, the investing shifts to gambling. Until an investor has actually gone through an investment cycle of a bear to a bull to bear market and seen the long term gain with lots of "noise" in between its easy to get sucked in by short term doom and gloom or hype. The other thing to realize is that there is no such thing as a "hot tip", 70% of the trades on the markets are computerized instantaneous transactions occurring in faster than blink of the eye that are factoring in any possible news, no way that an individual will ever get a jump on the computers. If its "hot tip" on an individual stock, ignore it and run away, if its truly inside information and someone trades on it, its illegal. Usually the "hot tip" is put out by folks who stand to gain doing something opposite of what they are telling other folks to do. Look up "pump and dump" or just watch the Wolf of Wall Street (a great movie bases on the penny stock market.
> 
> 
> I am buy and hold investor of no load mutual funds from Vanguard. Vanguard is the only investment firm not owned by shareholders. Vanguard's shareholders are the owners of the funds, thus there is no incentive for them to crank up the volume to pay a dividend to shareholder. Across the board they generally have the highest ranked funds and lowest expense ratios. Even though its pretty well proven by their founder, Jack Bogle, that index funds held long term is the best investment, they know folks are going to gamble their money trying to beat the market so they do offer managed funds and ETFs so their members don't have to go elsewhere. Remember in every transaction, for everyone that makes money, someone is losing money.
> 
> 
> The other long term thing is folks don't realize that inflation eats your money long term so just keeping it in a bank account or CDs means they are losing money long term. The fed has been printing money since the last financial crisis and artificially keeping the inflation rate low for quite a few years and the result was anyone with money in bonds, or CDs which are tied to bonds have had artificially low returns. The only way to keep ahead of bonds is to buy and hold stock based index funds, yes the funds could lose money in the short term (less than 5 years) but in the long run their returns will exceed long term inflation. On the other hand, the worse investments are folks who are in and out of the market listening to the short term doom and gloom as most of the gains happen quickly and if they are out of the market they miss out.
> 
> 
> If someone just cant ignore the news to buy and sell and are paranoid about the future there is already laddering CDs as an approach. There is no risk albeit crappy return that slowly gets eaten by inflation. Note there is risk to bond funds that a lot of folks don't realize, the return on bonds is tied to federal bond rate if the fed rate goes up, the bonds fund value drops as its holding lower interest rate funds. Once a bond fund starts to loose money many folks want to get out of it and that creates an even bigger drain on the fund. There is far less risk buying short term bond funds but lower returns.



Well said all of it.

One thing we should clarify for those that are not aware is that most of the Vanguard ETFs _are _Index Funds.  An ETF is not a different class of investment, just a different way to buy and sell them, but one that does have some cost advantages over traditional funds.    Vanguard is actually unique in that their ETFs are not separate vehicles but are actually just another share class of their existing mutual funds – they actually have a patent on this and it allows them to use the ETF class to help lower costs on the traditional fund classes.

For those who are interested in ETFs here is some good reading… but if you are an absolute beginner its better to first get the basics of mutual funds, asset allocation, etc first before looking at questions like mutual  funds vs. ETFs.

https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds

https://patents.google.com/patent/US6879964






Seasoned Oak said:


> I do agree about the DOW. Historic rates mean nothing, with the levels of debt piled up that will never be repaid, we are not in any previous historic situation. If we cant keep the bills paid while borrowing trillions,how will we ever survive while paying those same trillions back with interest.




The problem is, that’s been said before.  After the great depression they said that , and while it took decades the market recovered and went up spectacularly. After 1987 they said that and in retrospect it was only a blip. After the dot com crash they said that, and guess what the market recovered.  After the great recession they said it and guess what, the market has more than doubled.

Bogle has a phrase for this “nobody knows nothin”








https://www.marketwatch.com/story/t...-with-these-awful-correction-calls-2018-08-28


This time may actually be different, but the problems is we have no way of knowing for sure in advance.  So the best you can do is _stay the course._


----------



## jharkin

Part 3 – Investment vehicles

I talked a bit about investment types, but I also want to address investment vehicles. A couple of posts peaked my interst that merit more discussion…



peakbagger said:


> Folks like to fondly remember defined benefit pension plans and think they were a panacea for all the current issues. It wasnt and was fundamentally flawed. For everyone who made it to retirement there was a large number of folks that never made it. Unlike IRAs they weren't portable, folks were stuck working for the same company for their entire career even if they hated the work as the plans were loaded to reward longevity. Contrary to popular belief the plans were not funded from past contributions by the company, the vast majority of the payouts for current retirees were from current profits. Fine if the company was growing and the the number of retirees was low compared to the employee base companies muddled through. It wasnt until after a string of high profile plans going bust that the government created the Pension Benefit Guarantee Corp to backstop the plans and required companies to meet reserve requirements. Unfortunately business had a lot of friends in congress and they were allowed to set unreasonably high investments returns to justify keeping low reserves. The result were companies decided defined benefit plans are a liability and have been dumping them on PBGC generally vastly underfunded so the whole defined benefit option is going belly up.



This one is tricky peak….  The problem is that finance and economics is complicated…  REALLY complicated. I’ve spent probably years worth of my adult life reading a bunch of the books I mentioned above, studying, participating in finance forums and I still only scratch the surface  (and based on your inputs to the thread I suspect you have studied just as much) – but most people don’t. Yet the move to 401k’s and self directed investing as the default options  means that we *all *need to have some level of expertise at this to retire successfully.

The problem is that as a society we don’t educate people on these topics and leave them to navigate these complicated water blind.  Defined benefit pensions, for all their faults, addressed this by taking that burden off the masses and transferring it to a small core of professionals – the staff actuaries, accountants and money managers that ran the pension funds.




EatenByLimestone said:


> Don't buy an annuity.  They're horrible ideas, unless you're the one selling it.
> 
> 
> If only Bush was able to privatize the 3% (I think that was the number.)of contributions he wanted to with social security.  The market has done nicely




Not so fast…. Annuities are _mostly_ bad, with one exception – SPIAs (single premium immediate annuities).  These vehicles are basically a way to “buy a pension” and are appropriate for some people… especially those who don’t want to assume the risk and burden of managing their own investments. Another poster in this thread was concerned about the complexity of their spouse/kids having to figure it all out when they are gone – that person might be a great candidate for a joint/survivor SPIA.

As far as the idea of privatizing SS…. There are so many was that can go wrong. First off, since current benefits are paid by current income, allowing people to opt out going forward is guaranteed to crash it..  And second you sre chasing returns based on the last few years  of massive growth in the market. If this where 2009 I doubt you would be making the same claim.

Which is a great Segway  to the next topic…social Security.


----------



## jharkin

Part 4 – On Social Security




Seasoned Oak said:


> The problem is not me or you or others that prepare. Its the millions that don't plan, thus putting the burden of those final years of support on the public at large. They must be forced to save and SS is just one way to do that
> 
> We already do have the option to do both. Most people get all their money back they paid in from SS in the first few years they start collecting. I know I will and ill be starting to collect in a few months, Iv been investing in alternative income sources my whole life which will provide the bulk of my support and I probably did as well as any 401k did.  Plus if your chosen 401k contribution plan went south you would still have something to fall back on which is currently SS. What I don't like is the Govt raiding the ss fund and paying a paltry 2% or whatever back to the fund in exchange for squandering the funds. A much better return would be had from the stock market ,but then they (politicians)couldn't squander the money.






Seasoned Oak said:


> In doing the math i find that i will collect everything i paid in not including any interest in about 3 years. So yea, SS is woefully under funded. Perhaps when the entire economy collapses due to the National debt and we are all forced to live within our means and what we actually produce, not off borrowing for decades they will come up with a more sustainable plan or not. Until then its all about spreading around(borrowed) freebies to get reelected. None of its sustainable ,not health care,not the Debt,or deficit spending,unfunded pensions,welfare state ect.





Seasoned Oak said:


> Personally i do NOT want to opt out. If that were allowed the largest contributors would flee leaving an already underfunded insurance program to fail in freefall. Many of those if not most of those who save nothing for retirement will continue the same course and be 100% dependent on social services for 100% of their after retirement expenses. Living expenses not covered by retirees SS ultimately are all just shifted to another part of the govts liabilities.





mass_burner said:


> SS is capped : Workers will contribute 6.2 percent of their earnings to *Social Security* until their income exceeds $128,700 in *2018*. So higher wage earners aren't significantly encouraged to opt out. You can make the argument that if you make 125k, 100% of your income is subjected; if you make 10 million only 1% is...fair?





Seasoned Oak said:


> Lots of variables have changed which will gut the program ,the 2 most drastic ones are:
> 
> 1.People living much longer.
> 
> 2.Only a few contributors per retired person as boomers retire.
> 
> 
> Another drain is people that never paid anything in such such as immigrants immigrating after retirement age ,though im not sure where that money comes out of, but it adds to the debt no doubt. I know of a few people(immigrants) who brought their parents after they became citizens. The govt makes them(citizens)sign an affidavit of support but certainly dont enforce it at all, so its meaningless.




I picked on a few quotes to illustrate a fundamental problem… few people really understand what social security is and how it works.

First off some basics:

#1 Social Security -the OASDI part – is technically an old age insurance policy.  Its like a pension or annuity in that once you pay in you are guaranteed benefits for life no matter what happens and no matter how long you live.    It was never intended to be anyone’s sole means of support, but it does serve a valuable role as mentioned to make sure that people who didn’t plan, or people who did but end up living to 110 years old by a fluke of genetics, don’t outlive their money and end up destitute.

#2 The government isn’t “raiding” the money and not missing out on the market.  The FICA taxes we pay in go into a trust fund, and by law the government is supposed to invest that fund to get some return. But the law also prevents the government from speculating with the money on the stock market. So they do the only thing they can, the use the trust fund to but treasury bills.  This is what the false “raiding the trust fund” argument is based on. But its not raided, just invested and in the coming years as benefits exceed revenue all those bills will be cashed out to cover the gap.

#3 Which leads to the solvency question. SS is never going to go away. Its too important and too many depend on it. What will happen around 2034 is the trust fund will run out and then the SSA will only have 70 cents on the dollar for benefits.  About a month before that, as happened in the 1980s under Reagan, congress will push though an 11th hour fix. This could be further raising the FRA age, increasing the FICA tax, further taxing benefits, or some combination. These changes are natural, required  and expected considering when the program was designed the average life expectancy was only 60-something.

#4 People get benefits in proportion to what they contribute.  The formula is complicated however so there is a lot of confusion. Nobody is earing benefits without contributing the minimum 40 quarters (they might get SSI or welfare or something else, but they are not getting traditional SS). And its not “unfair” to the millionaire who earns 1 million and only pays FICA up to the $128k cap since he doesn’t get any more benefits then somebody who only earns 128k.

#5 The fact that some people will get more out of it then they ever put in is OK, because its balanced out by many people who get far less than they put in because they die before they can draw it all.  The SSA has an army of actuaries who figured all this out and calculate all the benefits, bend points, adjustments for early and late claiming etc. so that as a group all the participants average out.

For more than you ever wanted to know, here is some reading.

SS 101

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

https://en.wikipedia.org/wiki/Social_Security_Trust_Fund

https://www.ssa.gov/OP_Home/handbook/handbook.html

https://www.investopedia.com/articles/retirement/06/socialsecurity.asp


SS201

 If you get though all that and want to know more read about the bend points, tax issues, claiming strategies, etc

https://www.bogleheads.org/wiki/Social_Security

https://www.bogleheads.org/wiki/Taxation_of_Social_Security_benefits

https://www.bogleheads.org/wiki/Social_Security_tax_impact_calculator


Your SS301 homework is to find and use some of the SS benefit optimization calculators that optimize the best time to draw.  Bedrock Capital used to have a great free one called SSAnalyse but there are tons of them. Use your GoogleFu.

One new one I just found: https://opensocialsecurity.com/


----------



## jharkin

Part 5 – On income inequality,  interest rates, inflation, money creation and other macro topics



peakbagger said:


> The US was actually closing in on zeroing out the deficit around the year 2000 under Bill Clinton. Economists were getting worried as the Feds control of the economy was by controlling the interest date on the debt. With far reduced government lending, they could potentially lose control of setting rates. It wasn't until the Bush came in and did another tax cut that the deficit started climbing.





Seasoned Oak said:


> I was talking about historic INTEREST rates. The interest rate now paid on the National debt is at abnormally low rates.Once these rates adjust back to historic norms the Govt will be bankrupt. Which is why they will have to keep Interest rates low at all costs.Interest on the debt will crowd out all other federal spending. As far as rentals ,100% of my income comes from rentals an purchase contract payments. These will disappear quickly when tenants and buyers lose jobs and income. Rentals are far from bulletproof income. The only bulletproof investment that i can think of is a farm. Ask the amish. Im not sure what to do as i dont have plans to buy or ability to operate a farm.




OK, I should stipulate that here we are getting into macro economics and this is there I get out of my depth. But again, this stuff is a LOT more complicated than some of the discussion in thread would imply.   Again, I’m just using a couple choice posts as examples.  I highly encourage you to read and research on your own.

First off, the Government does not ‘control the economy with the deficit’.  The government has lots of methods at its disposal but one of the most used is central bank control of interest rates – in our case the Federal Reserve.  But the fed doesn’t do this by setting rates on the national debt (T-bills), what the fed sets rates on is the overnight lending to large commercial banks. This drives the spread of what banks charge in interest to business and commercial borrows and together with market demand and mandated reserve ratios affects how much money is created and injected into the economy.

The fed rate setting is only indirectly tied to the deficit, and in fact going to no deficit is bad but for a less direct reason than cited above. When the government is borrowing heavily they have to attract buyers for T-bills and they do that by paying a premium to prevailing rates (driven by the fed).  If the government doesn’t borrow, then this extra effect propping up market rates goes away, and when people cant get good rates on debt (and remember bonds, CDs, etc are essentially investing in debt) then they start piling money under the matress and the whole engine of the economy slows down.




sportbikerider78 said:


> The solution to income distributions is not more taxes.  It is less taxes.
> 
> 
> More money for the rich does not mean less money for everyone else.  This is bad economics.  There is no fixed amount of revenue or income generation.  Wealth is created every day.  There is no 1 pot of money and everyone has to fight for a share.
> 
> Rich people have effectively low tax rates because they have investments like rental properties, businesses and others (giving some away) that reduce their effective tax rate.  You can take advantage of those just like a rich person.  I'm looking at a rental properties to do exactly the same thing.  It is smart tax avoidance and perfectly legal.
> 
> The rich start big businesses.  I work for a rich guy and I'm super glad he is rich.  He is generous to us employees and does his best to make us as wealthy as possible.  He is probably in a 2%'er.  He is not some super bad guy, he is a hard working American that deserves every dollar he made.
> 
> This victimization of the rich as if they are 'putting it to the little guy' is laughable.
> 
> The corporate tax breaks he just got under the new tax plan are getting reinvested back into the business in the form of hiring new people and building a new building!  That's awesome!
> 
> 
> When rich people put their money away in a bank and save it, it naturally reduces the interest rate for the rest of us.  The bank now has more money to loan out to everyone.  This is a good thing.  This spurs capital investment and drives the economy forward because capital is cheap.
> 
> 
> As little guys, what we should be united in fighting against is why $100k today is worth very little 30 years from now.  It is absurd that our money loses its value like it does.  That is the single biggest thing that hurts saving.  If we can agree on one thing, let's agree on keeping the hard earned money we work for.



That’s not how it works sportrider…   Some rich guy putting his money in the bank doesn’t reduce our interest or create money that you and I can borrow.  It was that way back in the days of hard currency  and the gold standard, but not now.  In the modern system of _fractional reserve banking_, when big commercial banks lend they are actually creating money… literally out of thin air.  The interst rate is a spread over their borrowing rate (the fed funds rate), and how much they can lend is driven by reserve ratio requirements.. Then when they make the loan they actually create money by simultaneously adding some zeros to your (borrowers) account and a matching amount to their receivables (assets) on the balance sheet. 

Its really complicated voodoo like weirdness but that’s how it works.

Yes, there is some influence on inflation since the act of parking cash shows growth, and that cash adds some assets to the banks reserves they can multiply… but it’s not nearly as direct as you implied.

See:

https://en.wikipedia.org/wiki/Money_creation

https://en.wikipedia.org/wiki/Money_multiplier

https://en.wikipedia.org/wiki/Money_supply

This idea that giving tax breaks to the rich creates jobs has been proven wrong so many times its hardly worth arguing.  Lots of data shows that most of what the recent tax breaks gave to business is just sitting on the sidelines in cash or being used to fund massive stock buybacks.  Many of the business that the president promoted went on to close plants and eliminate jobs anyway.  Very few used the money to give bonuses or hire, beyond what plans where already baked in.

http://time.com/money/5267940/companies-spending-trump-tax-cuts-stock-buybacks/



sportbikerider78 said:


> No doubt about it.  Much of it is because our dollar is worth much less than it has been.  Inflation is a killer.  Real inflation as seen by the CPI not just the value of a dollar because the federal reserve prints trillions in cahoots with congress/banks.



(the fact you were responding to BeGreens comments on income inequality got cut off)

Ok, this comment just makes no sense.  Inflation reduces the value of the dollars I earn in the exact same way it reduces the value of Bill Gates dollars. I have no clue where you got the idea that inflation causes inequality…


----------



## jharkin

Part 6   Tax Topics

Just a few quick clarifications…




Seasoned Oak said:


> Kind of a misnomer. Income earned from sources other than a job or salary are sometimes called unearned although they are of course earned. Would include  Interest,Dividends,capitol gains ect.   To put it simply ,the dividend checks surpassed the paychecks a long time ago.



It’s not a misnomer at all. “unearned income” is an official IRS term with a clear definition for tax purposes.  Its all income not earned as the result of work – investment income, passive business earnings, capital gains, etc.  This was created as a bucket to separate it out from earned income – which is everything else, basically all W2 and 1099-misc wages.  These buckets where created to separate out the different classes of income for calculating their different tax treatment and eligibility for various deductions and credits.

There is a lot of overlap to the more generic terms of _active _and _passive_ income.  I get active income in my paycheck every 2 weeks.  My IRA earns passive income all the time (well, when its not earning passive losses at least )  even if I’m sitting on the couch





Ashful said:


> You and I have very different definitions of “almost no one”.  Raising it from $5M to $10M takes it from the 3.5 percentile up to the 1 percentile level.  That is saving maybe 7.5 million Americans from paying the “death tax”.  These folks are overwhelmingly those hard-working self-made folks I mentioned in an earlier thread, such as doctors, restaurant owners, farmers, small business entrepreneurs, and anyone else who has worked hard to make a nice living for their family.  You begrudge them for wanting to keep what they busted their ass to make, just because others didn’t do the same?



Haven’t we had this discussion before, multiple times?  This whole concept of the estate tax “penalizing hard working farmers” has been disproven many many many times, but it’s a feel good soundbite  that just won’t die because so many people want to believe they actually have the opportunity to BE that wealthy someday.

https://www.politifact.com/truth-o-...-trumps-pants-fire-claim-about-estate-tax-sm/

The fact is the estate tax actually has a very noble purpose – to prevent the rise of the sort of landed gentry that closes the door on opportunity for the rest of us that was so common in old Eurpoe. I don’t know about you but I don’t want to be a serf.


----------



## jharkin

Part 7 Insurance

And close it out with some thoughts on insurance questions….



Seasoned Oak said:


> That's a pretty good deal. I  doubt if that would cover Healthcare alone here. My Health insurance (2 people) is $30K a year alone.



Oak, have you done research to see what you can qualify for on the health exchanges?  I realize you have some serious health issues, but one of the big changes in ACA was elimination of pre-existing condition clauses, so if anything it should be easier for you to get insurance that before not harder.

Now granted, many states have tried to gut ACA on purpose to make it fail… and if you live in one of those states I feel for ya.





sportbikerider78 said:


> No they haven't.  Costs and care aren't great in many countries.
> 
> When you pass laws like Obamacare that say everyone has to have insurance for a silly amount of care they don't need, the demand goes up and so does the price.



Sorry, sport but it sounds like you just don’t understand the concept of insurance.  Insurance' purpose is to create_ a shared risk pool _and make costs manageable for all participants. Catastrophic health problems are expensive.  Heart attacks can cost 6 figures, cancer treatment can cost millions. If the only people who bought coverage for those conditions where sick people than the program would not be able to absorb the costs and care would be unaffordable.

In other words, insurance is pointless if only sick people buy it.

And before you say “I’m young and healthy I don’t need” BS…  someday you will.  And there might be no advance warning.   You have a 1 in 2 lifetime chance of getting some form of cancer or being closely related to somebody who does.  I lived through four (4) immediate family cancer diagnoses this year alone – its part of why I’ve been gone from here.  I can tell you that without health insurance coverage we would have been bankrupted, and I would have attended more than one funeral.[/QUOTE]


----------



## Seasoned Oak

jharkin said:


> The problem is, that’s been said before.  After the great depression they said that , and while it took decades the market recovered and went up spectacularly. After 1987 they said that and in retrospect it was only a blip. After the dot com crash they said that, and guess what the market recovered.  After the great recession they said it and guess what, the market has more than doubled.
> 
> Bogle has a phrase for this “nobody knows nothin”
> 
> 
> https://pbs.twimg.com/media/DloRqfCW4AE6EZs.jpg:large
> 
> https://www.marketwatch.com/story/t...-with-these-awful-correction-calls-2018-08-28
> 
> 
> This time may actually be different, but the problems is we have no way of knowing for sure in advance.  So the best you can do is _stay the course._


I was referring to the accumulated debt of 21Trillion ,and the prospects of paying it back.. Has nothing to do with the stock market.


----------



## sportbikerider78

jharkin said:


> That’s not how it works sportrider…   Some rich guy putting his money in the bank doesn’t reduce our interest or create money that you and I can borrow.  It was that way back in the days of hard currency  and the gold standard, but not now.  In the modern system of _fractional reserve banking_, when big commercial banks lend they are actually creating money… literally out of thin air.  The interst rate is a spread over their borrowing rate (the fed funds rate), and how much they can lend is driven by reserve ratio requirements.. Then when they make the loan they actually create money by simultaneously adding some zeros to your (borrowers) account and a matching amount to their receivables (assets) on the balance sheet.
> 
> Its really complicated voodoo like weirdness but that’s how it works.
> 
> Yes, there is some influence on inflation since the act of parking cash shows growth, and that cash adds some assets to the banks reserves they can multiply… but it’s not nearly as direct as you implied.
> 
> See:
> 
> https://en.wikipedia.org/wiki/Money_creation
> 
> https://en.wikipedia.org/wiki/Money_multiplier
> 
> https://en.wikipedia.org/wiki/Money_supply
> 
> This idea that giving tax breaks to the rich creates jobs has been proven wrong so many times its hardly worth arguing.  Lots of data shows that most of what the recent tax breaks gave to business is just sitting on the sidelines in cash or being used to fund massive stock buybacks.  Many of the business that the president promoted went on to close plants and eliminate jobs anyway.  Very few used the money to give bonuses or hire, beyond what plans where already baked in.
> 
> http://time.com/money/5267940/companies-spending-trump-tax-cuts-stock-buybacks/
> 
> 
> 
> (the fact you were responding to BeGreens comments on income inequality got cut off)
> 
> Ok, this comment just makes no sense.  Inflation reduces the value of the dollars I earn in the exact same way it reduces the value of Bill Gates dollars. I have no clue where you got the idea that inflation causes inequality…


Sure it is.  The more money in the banks the more money can get lent out at better rates.  It works that way AND it works in the way you described with the Fed Reserve.

We agree on inflation..with a little clarity on the last point. 
If the fed prints $1T tomorrow the entire market has not seen the inflation on that new fresh currency till it is used, spent, borrowed...ect.  This gives the first user all the benefits of fresh, uninflated cash..and that is the banking institutions.  The rest of us eat that inflation while the banks get to use it first..because of the Fed. 
I didn't go into detail on that in this post,,but that is where I was coming from. 

Who cares what rich, poor, middle class...ect do with their tax breaks.  It is their money. Story after story about companies giving bonuses, raises, capital investments...ect.  Quite common.  My company is hiring another sales associate.  We are a small private company. 
Maybe I should explain to Time magazine that what is good for investors is good for employees.

(late edit)

Perhaps what we can agree on is the we (as in, jokers like you and I) should control the value of money instead of a few very powerful bankers, congress and the federal reserve.


----------



## sportbikerider78

jharkin said:


> Sorry, sport but it sounds like you just don’t understand the concept of insurance.  Insurance' purpose is to create_ a shared risk pool _and make costs manageable for all participants. Catastrophic health problems are expensive.  Heart attacks can cost 6 figures, cancer treatment can cost millions. If the only people who bought coverage for those conditions where sick people than the program would not be able to absorb the costs and care would be unaffordable.
> 
> In other words, insurance is pointless if only sick people buy it.
> 
> And before you say “I’m young and healthy I don’t need” BS…  someday you will.  And there might be no advance warning.   You have a 1 in 2 lifetime chance of getting some form of cancer or being closely related to somebody who does.  I lived through four (4) immediate family cancer diagnoses this year alone – its part of why I’ve been gone from here.  I can tell you that without health insurance coverage we would have been bankrupted, and I would have attended more than one funeral.


[/QUOTE]

You don't understand what Obamacare did.  Insurance already provided care for those serious conditions you listed.


----------



## peakbagger

Wow looks like most of my prior comments passed muster. In the last month of so there have been multiple articles about the financial crisis of 10 years ago (2008). The summary of the impacts  was those who were in a broadly diversified portfolio who stayed in the market survived and even thrived, those who got out of the market mistimed when to get back in and lost money.  Luckily I took advantage of the low and converted a few IRAs to Roth's when the market was low and saved a bundle of future taxes plus shifted the profits when they went back up again to non taxable. I also stayed in the market and came out pretty well on it 10 years out.

My big project now is moving things around and coming up with a plan for an early retirement. The bull market is peaking and a "black swan" (most likely with orange hair and small hands)  is looking to land so hopefully I have the time to get at least some of the investments realigned to ride out the next one a bit more conservatively.

A more succinct method of investing was spoken by John Goodman in the movie the Gambler. If is full of expletives so be careful if you play the video with the volume turned up.

http://www.mymoneyblog.com/f-you-money-gambler-movie.html


----------



## Highbeam

peakbagger said:


> The bull market is peaking



Ha! Are you saying the top is in? You don't know that and neither does anybody else. We've been hearing that the top is in for many years now and if you believed it then you would have already sold out and the pile of cash under your mattress would have lost out on lots of earnings.


----------



## peakbagger

The top may or may not be in but there are indications that this bull is definitely mature. The standard warning about financial predictions is "this time things are different". Its been pretty consistent that the market is cyclical over the long term and the current market is way out past the length of normal bull markets. There have been artificial drivers in place (ultra low interest rates)  to keep it running and last tax revision poured more fuel on the fire by cutting corporate tax rates and allowing offshore profits to come back to the US). Revenues from corporate taxes are dropping quickly and the deficit is going up. The Fed is cranking up rates and at some point that usually slows down the market.

In the past I really didn't care as my time horizon was longer (more than 5 years) but I plan to be starting a draw down sooner than that so I need to rotate some of my equities (with high capital gains) into a higher percentage of bonds. Worry not I will still be in equities just a lower percentage of them.


----------



## MikeK

Ashful said:


> I’m not currently living in a house that has been in my family since the 1690’s.


Ashful that is amazing.  I am sorry you and your family lost that house.  I think I remember reading in other posts about some of the history of homes you knew or your family lived in.  Is that 1690s house still in existence?


----------



## Ashful

MikeK said:


> Ashful that is amazing.  I am sorry you and your family lost that house.  I think I remember reading in other posts about some of the history of homes you knew or your family lived in.  Is that 1690s house still in existence?


"In existence" is a relative term.  Yes, it's still there, but the asshat who bought it "restored" it.  Now it looks like every McMansion modern developers throw up. 

Awesome posts, jharkin.  I disagree with you on the death tax comments, but no need to drum up old arguments, already had.


----------



## Highbeam

The trinity study assumed a 30 year retirement and no social security. Had to check! @jharkin


----------



## jharkin

Seasoned Oak said:


> I was referring to the accumulated debt of 21Trillion ,and the prospects of paying it back.. Has nothing to do with the stock market.



There is a term called "inflating the debt away" that contends it just doesn't ever need to be repaid.  Its argued a lot among economists who understand this stuff much better than I do ... but at a very superficial level I get it.

Just imagine today you buy a house and lock in that mortgage at 4.5%.   Then image inflation goes  double digit nuts like the 70s..  In 10 years the mortgage nut will be nothing but pocket change.   Way oversimplifying things but that's the general idea...





sportbikerider78 said:


> Perhaps what we can agree on is the we (as in, jokers like you and I) should control the value of money instead of a few very powerful bankers, congress and the federal reserve.



This we can agree on.  What the big banks got away with in the housing runup was criminal.  


You don't understand what Obamacare did.  Insurance already provided care for those serious conditions you listed.[/QUOTE]

I am aware of that.  But pre-existing condition limitations meant that people could get denied for buying new plans on the open market.

The bigger point I was arguing is your contention that we should be allowed to pick and choose what coverage we buy. The problems is as soon as you do that a lot of young, healthy (and dumb) people will not buy coverage... shrinking the pool of premium funding,  making some care affordable for those who do need it.  

Massachusetts mandates a lot more coverage beyond the federal minimums, and yet plans on our state health market, on average,  are cheaper than many states that require only bare minimums with greater cost sharing credits, etc.. hmmmmm...


----------



## jharkin

Highbeam said:


> Ha! Are you saying the top is in? You don't know that and neither does anybody else. We've been hearing that the top is in for many years now and if you believed it then you would have already sold out and the pile of cash under your mattress would have lost out on lots of earnings.



+1    This is what I was saying on the last page. In 2009 all the pundits where calling the end of capitalism as we know it...  and then the market went on a 1980s like tear. 


That's the problem.. we don't know.  Try to time the market and you are likely to loose... this is a key tenant of Bogle-ism... There was a long running discussion on the bogle forum about how much of the long term gain of the market comes from a few really good years, so you are just as likely to loose out by mistiming a peak as mistiming a bottom.

Using a defined AA protects you from this and forces you to buy low/sell high automatically.  If I say I'm 60% equity/ 40% bond... as the market climbs re-balancing to maintain that allocation requires I sell stock gains to buy bonds... then when the peak passes and it declines, my AA forces me to sell bonds to buy declining stocks.   Its automatic and not subject to guessing.


If a true blacks swan happens and the entire market does collapse, selling out early wont matter much anyway.  That's the nature of a black swan....  its by definition something we cant predict.


EDIT:  wrote this as I was walking out to lunch and didn't see your follow up about a short time horizon.  I agree we are probably due for a correction but my time horizon is still 15 years to retirement so I see it as a buying opportunity. Good luck!


----------



## Seasoned Oak

jharkin said:


> There is a term called "inflating the debt away" that contends it just doesn't ever need to be repaid.  Its argued a lot among economists who understand this stuff much better than I do ... but at a very superficial level I get it.
> 
> Just imagine today you buy a house and lock in that mortgage at 4.5%.   Then image inflation goes  double digit nuts like the 70s..  In 10 years the mortgage nut will be nothing but pocket change.   Way oversimplifying things but that's the general idea...
> .


I guess thats exactly the plan,cuz both parties seem to be falling over each other trying to borrow and spend as much as they can.


----------



## jharkin

Seasoned Oak said:


> I guess thats exactly the plan,cuz both parties seem to be falling over each other trying to borrow and spend as much as they can.




They do, and  in part the problem is that nobody seems to have found a way to really kick start growth on main st this time around.  The markets have done well, and I don't deny Ive benefited from that but I am well aware that many... the majority... have not. 

I don't have the answer... I 'm sure Id be preaching to the quire to say there are no easy answers......


----------



## Seasoned Oak

jharkin said:


> They do, and  in part the problem is that nobody seems to have found a way to really kick start growth on main st this time around.  The markets have done well, and I don't deny Ive benefited from that but I am well aware that many... the majority... have not.
> 
> I don't have the answer... I 'm sure Id be preaching to the quire to say there are no easy answers......


I do see some growth on Main St here. Lots of activity the last year or so in my  economically dead small town. Not a lot of Mfg or factories but lots of Wineries, Brew pubs, Restaurants,(probably too many) Lots of Home Remodeling and Real Estate investment.(My field).Real Estate prices are advancing more than any time in my 62 years here. There is an optimistic air about.


----------



## sportbikerider78

jharkin said:


> The bigger point I was arguing is your contention that we should be allowed to pick and choose what coverage we buy. The problems is as soon as you do that a lot of young, healthy (and dumb) people will not buy coverage... shrinking the pool of premium funding,  making some care affordable for those who do need it.
> 
> Massachusetts mandates a lot more coverage beyond the federal minimums, and yet plans on our state health market, on average,  are cheaper than many states that require only bare minimums with greater cost sharing credits, etc.. hmmmmm...



Then they can pay more if they have bad health.  I understand perfectly how insurance works, but I also see no issue with paying more if you are in bad health.  We accept this with bad drivers.  We accept this with bad credit. 

This graphic doesn't really show the rates lower in MA, it shows them higher than average.  https://howmuch.net/articles/health-insurance-rates-by-state
MA appears to be 2nd in the country for state spend per capita on health care.  Maybe that is keeping individual costs down through subsidization? https://www.beckershospitalreview.c...akdown-of-per-capita-healthcare-spending.html

My wife worked for a very big insurance company and she underwrote/priced small group and individual health care plans.  As a nurse, she would look at their medical history, prescription history, ect..and price the plan.  One of the biggest factors was what state they were in.  The minimum coverages where so different state to state (set by state government), that many insurance companies would not do business in those states.  This gives the ones that do, a sort of small monopoly on the citizens.  The state, through minimum coverage standards, prevents the citizen from using all of the collective competition of many ins companies and that prevents them from getting the best price possible for what they want.  When insurance companies compete for your business, you win.  

My points are in no way to defend or empower insurance companies.  In fact, I believe the recent obamacare has simply made them even more powerful and rich.  My point is that we can't in any way blame a free market system for our rising health care costs.  We have government meddling everywhere and every step of the way.  Our health care and health insurance is very far from free market.  
We have to look at why health care costs so much.  If we got that cost down, insurance would follow.  

Something to ponder....there are facilities opening up that will not take any insurance.  Cash only for operations.  They cost about 10% what the operation would cost in a normal hospital and their success rate is high and their infection rate low.  Everyone gets the same price.


----------



## peakbagger

My area of NH was hit hard by the crash and burn of the paper industry. We lost 2 paper mills,  a major pulp mill and the remaining papermill is shadow of itself and is struggling. The direct jobs impact was around 2500 jobs in around 10 years in a very rural area. There were a lot more indirect job impacts. The local towns were struggling. The area is on the northern fringe of tourism for the White Mountain National Forest but outside of the magic 2 hour driving time from Boston. The area did end up with a federal and state prison that stabilized the workforce  so that we could retain a hospital and other services but a lot of folks left the area and the remaining retirees homes dragged the market down as they slowly moved out and passed away. 

The thing that has replaced well paying industry jobs is more tourist jobs related to ATVs. The entire lightly populated northern part of the state is now a hot bed of ATV activity. Most towns allow ATVs to ride on town roads and folks can go quite a long distance strictly on ATV trails, I think they are over 1000 miles or trails. There is also a 7000 acre state park that is mostly exclusively for ATVs. The area had active snowmobile tourism but that was too seasonal, when the ATVs are added in it allows businesses to run 10 months a year. Houses are relatively cheap so folks from southern New England are buying homes in town to use for when they visit and some are moving up when they retire. The tourist town I live in was struggling but now has stabilized and is actually growing, most weekends every motel room and campground is booked the entire weekend and even during the week there is steady traffic. There have been a couple of steel and metal fabrication businesses that moved up to the area due to a well trained labor pool that has reasonable work ethic who tend to like living where there is good hunting and fishing along with ATV and snow machining from in some cases the front door. Its nowhere like the days of the papermills but the area has slowly reinvented itself. Its not without hiccups, some folks moved up here to get away from it all and now they have ATVs cruising down the roads in front of their houses but there are attempts to build new trails to get the routes off the roads.


----------



## jharkin

sportbikerider78 said:


> Then they can pay more if they have bad health.  I understand perfectly how insurance works, but I also see no issue with paying more if you are in bad health.  We accept this with bad drivers.  We accept this with bad credit.



The difference is that people in bad health often don't KNOW they are in bad health.   A distant  relation of mine ... guy in his early 50s, runner,  very fit....  started to feel unusually tired and goes in for a checkup...

Stage 4 Pancreatic cancer.

Almost no warning signs till its too late and then it progresses fast.  7 figures of experimental treatments etc, and I'm sure you know what the prognosis is.

What if he had said " I feel healthy, I wont bother to buy cancer insurance"  




sportbikerider78 said:


> This graphic doesn't really show the rates lower in MA, it shows them higher than average.  https://howmuch.net/articles/health-insurance-rates-by-state
> MA appears to be 2nd in the country for state spend per capita on health care.  Maybe that is keeping individual costs down through subsidization? https://www.beckershospitalreview.c...akdown-of-per-capita-healthcare-spending.html



Only a little higher than average - but look at the second graph you posted of deductibles.  Some of the "cheap states"  have deductibles 3x as high or more   for only 5-10% less in monthly premiums. Wouldn't the guy in the white house call that " a bad deal... sad."


You can also use the Kaiser Foundation calculator to see what a plan would cost you in each state:
https://www.kff.org/interactive/subsidy-calculator/

I don't doubt that a lot of this is due to state subsidies, remember that that our system was what Obamacare was modeled after. But the funny thing is that even with all those subsidies our state income taxes are right in the middle nationally , and in fact lower than most of the sates on your map with high insurance  deductibles :
https://taxfoundation.org/state-individual-income-tax-rates-brackets-2017/




sportbikerider78 said:


> My wife worked for a very big insurance company and she underwrote/priced small group and individual health care plans.  As a nurse, she would look at their medical history, prescription history, ect..and price the plan.  One of the biggest factors was what state they were in.  The minimum coverage's where so different state to state (set by state government), that many insurance companies would not do business in those states.  This gives the ones that do, a sort of small monopoly on the citizens.  The state, through minimum coverage standards, prevents the citizen from using all of the collective competition of many ins companies and that prevents them from getting the best price possible for what they want.  When insurance companies compete for your business, you win.
> 
> My points are in no way to defend or empower insurance companies.  In fact, I believe the recent Obamacare has simply made them even more powerful and rich.  My point is that we can't in any way blame a free market system for our rising health care costs.  We have government meddling everywhere and every step of the way.  Our health care and health insurance is very far from free market.
> We have to look at why health care costs so much.  If we got that cost down, insurance would follow.
> 
> Something to ponder....there are facilities opening up that will not take any insurance.  Cash only for operations.  They cost about 10% what the operation would cost in a normal hospital and their success rate is high and their infection rate low.  Everyone gets the same price.




No argument that there is tons of waste in the system.  My mom takes a cancer medication that costs $12,000 a month.  In Canada or Europe it would cost less than 1/10th that..

But call me cynical, people are.. well... dumb.  Set those minimum coverage's very low and most people will only buy the minimum coverage and then be devastated financially when something unexpected happens like the cancer diagnosis I mentioned, or a serious head injury, or a complicated childbirth  (remember some idiot in congress wanted to make childbirth an "optional" coverage. WTF) .  I see it all the time when there is a house fire in town and people start go fund me's to help the affected family eat because folks are not prepared and skimped a few bucks on homeowners coverage 

I would be all for a single payer system that eliminates all the middle layers of bureaucracy, but I am well aware our current system is far too entrenched to make that possible without massive economic disruptions....


----------



## Seasoned Oak

jharkin said:


> The difference is that people in bad health often don't KNOW they are in bad health.   A distant  relation of mine ... guy in his early 50s, runner,  very fit....  started to feel unusually tired and goes in for a checkup...
> Stage 4 Pancreatic cancer.
> Almost no warning signs till its too late and then it progresses fast.  7 figures of experimental treatments etc, and I'm sure you know what the prognosis is.
> What if he had said " I feel healthy, I wont bother to buy cancer insurance"
> .


What is it about runners .A good friend of mine died in his 40s same thing pancreatic cancer ,active runner.  I think sometimes they over do it like those 24 hr marathons.


----------



## Highbeam

I only run when being chased by bees! My anti-cancer strategy. @Seasoned Oak 

I’m not normally a liberal/Democrat/socialist type person but I support the universal health care system idea. Willing to pay taxes so we all have health services.


----------



## Jan Pijpelink

Highbeam said:


> I only run when being chased by bees! My anti-cancer strategy. @Seasoned Oak
> 
> I’m not normally a liberal/Democrat/socialist type person but I support the universal health care system idea. Willing to pay taxes so we all have health services.



I support that too. But coming from a country that has been under socialist governments for decades since WWII it only works for a while. Population is growing, people are getting older. Elderly have less income and pay less taxes but need much more healthcare. Younger people stay in school longer, start to earn money at later age and therefore pay a lot less taxes to help fund the healthcare system. All added up, the system works for let's say 40 years and then the funding dries out and you get in trouble. Then, the premiums have to go up to continue funding, but youngsters and elderly cannot afford those high premiums.


----------



## Seasoned Oak

Highbeam said:


> I only run when being chased by bees! My anti-cancer strategy. @Seasoned Oak
> I’m not normally a liberal/Democrat/socialist type person but I support the universal health care system idea. Willing to pay taxes so we all have health services.


I agree ,since were going to pay for those who dont pay anyway with one caveat . It should be paid for with consumption taxes, not income taxes. That way every one pays, including the millions working under the table so to speak ,those earning but not claiming income. Those living off trust funds. Hookers, Drug Dealers, all elements of the unreported cash economy all pay, where they pay nothing now but of course use all the services.


----------



## peakbagger

Most likely in the next 12 months I will be having to get an ACA plan if they still exist. Its looks like $1000 a month for individual coverage similar to my Cobra coverage ( a High Deductible Health Care Plan). It is unlikely I will get a subsidy as my income from consulting and investments will put me over the limit. I expect it will be over 7.5% of my income so I can deduct the costs so a quick swag is 25% savings via a tax deduction for a net of around $9000 a year. Plus I will need to get some dental which appears to be about double of what my company plan costs so kick in $500 a year additional.

Right now I pay about $350 a month for Cobra. Barring me getting lucky and finding an alternative it means that my health care costs will be my biggest expense in a year and I will be paying it for about 5 years assuming that qualifying for medicare stays at 65.  I know of other folks that have preexisting conditions and if not for ACA, they really cannot afford insurance.

If ACA ceases to exist then I am at the mercy of individual plans and several years ago they were approaching $1,500 a month. I expect they will not go down in cost as I expect many of the folks with preexisting conditions will be forced to buy the plans. The alternative is to buy short term insurance for catastrophic issues and hope that I don't end up with a long term condition as typically how these plans work is they cover the long term condition for the limited duration of the policy and exclude those conditions from payment when the next policy is written. The intent of ACA was to spread the high costs for long term condtions over a greater size pool by having everyone have to by insurance but with the recent changes in tax law the penalties are almost nill for not buying it.  

Its easy to complain about ACA as most folks are covered by company plans. I know of folks who are Trump supporters who have changed their tune when they lose access to a company plan and have to look at ACA. Granted the system is not perfect and really should cut out the middlemen but the alternatives are far worse.


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## jharkin

Seasoned Oak said:


> I agree ,since were going to pay for those who dont pay anyway with one caveat . It should be paid for with consumption taxes, not income taxes. That way every one pays, including the millions working under the table so to speak ,those earning but not claiming income. Those living off trust funds. Hookers, Drug Dealers, all elements of the unreported cash economy all pay, where they pay nothing now but of course use all the services.



As much as I like the consumption tax in principle (encouraging savings) it has some significant challenges.


#1 Its regressive.
People on minimum wage spend 100% of their income.  I spend only about 35~40% of mine. Warren Buffet probably spends less than 1% of his.

#2 Our economy is driven by consumer spending.
Anything you do that discourages spending may theoretically slow the economy.  Which sucks because if we ever actually fixed the retirement saving deficit we may put a lot of people out of their jobs selling us all this crap we don’t need...


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## jharkin

peakbagger said:


> Most likely in the next 12 months I will be having to get an ACA plan if they still exist. Its looks like $1000 a month for individual coverage similar to my Cobra coverage ( a High Deductible Health Care Plan). It is unlikely I will get a subsidy as my income from consulting and investments will put me over the limit. I expect it will be over 7.5% of my income so I can deduct the costs so a quick swag is 25% savings via a tax deduction for a net of around $9000 a year. Plus I will need to get some dental which appears to be about double of what my company plan costs so kick in $500 a year additional.
> 
> Right now I pay about $350 a month for Cobra. Barring me getting lucky and finding an alternative it means that my health care costs will be my biggest expense in a year and I will be paying it for about 5 years assuming that qualifying for medicare stays at 65.  I know of other folks that have preexisting conditions and if not for ACA, they really cannot afford insurance.
> 
> If ACA ceases to exist then I am at the mercy of individual plans and several years ago they were approaching $1,500 a month. I expect they will not go down in cost as I expect many of the folks with preexisting conditions will be forced to buy the plans. The alternative is to buy short term insurance for catastrophic issues and hope that I don't end up with a long term condition as typically how these plans work is they cover the long term condition for the limited duration of the policy and exclude those conditions from payment when the next policy is written. The intent of ACA was to spread the high costs for long term condtions over a greater size pool by having everyone have to by insurance but with the recent changes in tax law the penalties are almost nill for not buying it.
> 
> Its easy to complain about ACA as most folks are covered by company plans. I know of folks who are Trump supporters who have changed their tune when they lose access to a company plan and have to look at ACA. Granted the system is not perfect and really should cut out the middlemen but the alternatives are far worse.



Ouch. I plugged the numbers for a couple age 60 with 100k income into the KFF calculator.

For NH I get $2200/mo for a silver plan.
For MA I get $1050/mo

Don’t know what to say, that is painful. I still have 15 years to go and I am deliberately putting more money in Roth accounts than a tax predictor would recommend so that if I retire early I can live of post tax savings and manipulate my income below the 400% FPL for the premium credits.

Sucks that we have to play these games, but I didn’t make the rules.


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## peakbagger

Interesting today that the Fed chairman specifically called out the current health care system as the source of the deficit.


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## Seasoned Oak

I never thought i would see the day when your Health Insurance bill was more then your home mortgage.


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## Jan Pijpelink

Seasoned Oak said:


> I never thought i would see the day when your Health Insurance bill was more then your home mortgage.


Ours is almost nothing.


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## Seasoned Oak

Jan Pijpelink said:


> Ours is almost nothing.


Yours is the same as the rest of us.  Yours just not paying it directly. Mine was much cheaper when i self insured and just paid for services as i used them.


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## Jan Pijpelink

Seasoned Oak said:


> Yours is the same as the rest of us.  Yours just not paying it directly. Mine was much cheaper when i self insured and just paid for services as i used them.


Correct. My company pays 90% of the bill, I just the remaining 10%


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## peakbagger

Jan Pijpelink said:


> Correct. My company pays 90% of the bill, I just the remaining 10%



That is the big problem with healthcare costs is to most working folks with benefits and politicians do not see the actual costs. Guaranteed when the employer is figuring out your pay, they factor in the "all in" cost as you as an employee which includes healthcare. Large employers also have to insure everyone so the overall risk pool size in increased which give them lower pricing per employee. They also are covering in theory somewhat healthy employed people so that means they do not have to deal with big risks like elderly or folks too unhealthy to work. Thus the difference between my Cobra rate of around $350 a month which was my employers out of pocket cost and the $1000 a month I need to pay for an ACA policy.  

One of the reasons a typical middle income person's pay hasn't gone up is that the raises are just going in to pay the steep yearly healthcare increases. Get a control on healthcare costs and that means more money in everyone's  pockets except for the middlemen running the costs up. 

My deceased dad was a 20 year air force reservist WW2 vet. He would comment on occasion that it was the best part time job he had as with the exception of his medicare contributions his healthcare and drugs were free after age 65 and even after he passed my mom gets the same treatment. He made it to 97 so that was 32 years of coverage and expect my mom will be around for a few more.


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## Seasoned Oak

Jan Pijpelink said:


> Correct. My company pays 90% of the bill, I just the remaining 10%


Same as a payroll deduction. But you dont see it listed as such on your pay stub. I do see it (Health Care Cost)popping up on some W-2s.


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## Jan Pijpelink

Seasoned Oak said:


> Same as a payroll deduction. But you dont see it listed as such on your pay stub. I do see it (Health Care Cost)popping up on some W-2s.



My payroll deduction is only 10%. We are an employee owned company and it has been decided from the start of the company in 1985 that we have a group insurance plan and the company budgets every year the 90% of the premiums to be paid as an operational expense. So, the employee-owners actually pay 10%.


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## Seasoned Oak

But you would get that expense paid directly to you in the form of higher wages if your company didnt have this expense right? So its not like your paying nothing or 10%. A form of hidden cost to you.  So whatever your company is paying on your behalf ,you are still paying 100%, you just dont notice it.


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## Seasoned Oak

Same as myself being self employed. It doesnt matter if i pay my health insurance with a company check,or pay myself that money first and then pay my HC insurance with a personal check. I m still paying 100% of the cost. Which ever way is more deductible is usually the preferred method.


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## Jan Pijpelink

Seasoned Oak said:


> But you would get that expense paid directly to you in the form of higher wages if your company didnt have this expense right? So its not like your paying nothing or 10%. A form of hidden cost to you.  So whatever your company is paying on your behalf ,you are still paying 100%, you just dont notice it.


Not really, we are already above market average with our wages. In our case, it is a company culture thing. Long story.


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## Ashful

Jan Pijpelink said:


> Not really, we are already above market average with our wages. In our case, it is a company culture thing. Long story.



Market average is also set by those same offsets.  Bottom line, you are sharing the pain, whether you directly see it (payroll deduction) or not.


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## jharkin

Jan Pijpelink said:


> My payroll deduction is only 10%. We are an employee owned company and it has been decided from the start of the company in 1985 that we have a group insurance plan and the company budgets every year the 90% of the premiums to be paid as an operational expense. So, the employee-owners actually pay 10%.



But Seasoned Oak and Peakbaggers point is that  money is coming out of the same revenue pool your salary comes out of.  They budget 90% and as such have less money available for raises.  You would just be even more "above market average"... remember market average can vary widely... a software guy in Ohio might make 75k, while the same talent in Boston would get 150 and in the valley... 250,300 or more.  (and yes I am aware most of those markets are 1%er bubbles)

Oak is right that W2's now report the company paid portion of your health plan for everyone... its an IRS requirement afaik.

My company does the same thing - I work in hi tech (software) and you probably have heard the tales of the kind of salaries Google, Facebook, Netflix, etc pay.. my company doesn't  - but my health insurance is cheap like yours.    I pay $250 a month for family  HDHP with a $1500 per person/$3000 combined deductible ( we joke that its the _low deductable high deductable_ plan).  I give up the sililcon valley size salary for that.

The flip side is Netflix.  They are famous for high pay and part of their corporate value is to "pay top of market for every position"  and never loose anybody over money.  But the cost of that top of market salary is they give _no_ breaks to their employees on benefits... everything is offered at cost. ( Its also a very competitive environment where I am told the annual review process amounts to interviewing to keep you job but htats off topic)


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## peakbagger

The company I am transitioning out of (not by choice) is mostly engineers and technicians  doing fairly technical work for the power industry. The company paid 100% of the health care costs for employees when I started, over the years due to higher costs they switched to a High Deductible Health Plan at no charge to an employee or a regular plan for a  fee. I didnt mind switching to a HDHP as it gave me a way of putting tax free cash away for retirement.

Young tech companies are going to have younger workers with lower health care costs and therefore their medical costs are low. One of the big benefits that car companies have when they move south is they are hiring young staff and that means cheap health care costs for a couple of decades before folks get old and the premiums rise.


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