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Thread: Can you afford to retire?

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    Featured Member Vamp's Avatar
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    Default Can you afford to retire?

    Can Americans Afford to Retire?

    Frontline on Pbs has done a wonderful one hour special about retiring in America.

    It shows how companies are not funding their pensions properly, relying on overly optimistic stock options to fund them, the pension goes into the red, and then they cut the pension out from under workers when filing bankruptcy because of the amount they owe back to the pension.

    There is a government agency called the Pension Benefit Guarantee Corporation. It is suppose to encourage companies to maintain their pensions and back them in case anything goes wrong. The laws are written with a lot of loop holes so that companies can under fund pensions for any reason. The cost to fund these pensions are then past on to the tax payer.

    The new 401k idea of retirement are filled with pitfalls. Many do not invest enough in their 401k to cover their retirement. Many do not understand investing enough to utilize the account to fullest potential. They end up loosing some or most of what they have contributed. 401k’s were never intended to be the soul vehicle for retirement. 401ks save companies 50% over pensions. This is a shift in who is paying for retirement.

    People are now retiring older and older. No more lifetime pensions can mean a lifetime of work.

    The link provides a lot of wonderful information. You can also view the program in it’s entirety. It really makes you ask a lot of questions about if you are prepared to afford to retire at all.

    http://www.pbs.org/wgbh/pages/frontline/retirement/

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    God/dess Deogol's Avatar
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    Default Re: Can you afford to retire?

    A lot of the loop holes are Congress' fault too.

    I grin when I hear people go on about my investing in the stock market as gambling but yet their IRAs and 401Ks are "savings."

    I think, when the baby boomers discover how badly scammed they were - this country is going to make France look like Hong Kong.

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    Banned Melonie's Avatar
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    Default Re: Can you afford to retire?

    It amazes me that nobody talks about the issue of baby boomers retiring and 'cashing in' their 401k, IRA and definied benefits retirement holdings. These assets make up something like 30% of the equity in US stock markets. What is supposed to happen to US stock prices when 30% want to sell and nobody wants to buy what they are selling ???

    Another issue of course is the fact that 401k, IRA and defined benefits retirement money are not actually the property of the future retiree ... they all have US gov't strings attached in the form of unpaid tax liabilities. Nobody is talking about the distinct possibility that, as Social Security deficits begin to grow, the US gov't is totally free to 'change the rules in the middle of the game' in regard to taxation of 401k and IRA withdrawls upon retirement, 'means testing' of future Social Security benefits against 401k and IRA assets etc.

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    Default Re: Can you afford to retire?

    Most people dont talk about it because most people do not see how the stock market effects their lives.

    When a person retires or reaches the age 70 1/2 for IRAs they have to start drawing money out of these accounts. They do not have to draw it all out. It makes not financial sense to withdraw the whole amout because of taxes and the fact most other types of accounts have lower rates of return. I do not think a mass exodus will occur.

    Not all IRAs and now 401ks are made the same. Roth IRAs and new this year Roth 401ks at retirement age do not pay taxes on withdraws.

    As far as changing the rules on Social Security, I doubt it would be that easy.

    What I do not understand is why companies are not forced to fund their pensions. With some pension plans employees pay into it but companies are not forced to transfer that money to the plan. It makes no sense. Tax payers pick up the bill in the end.

    I also do not understand why the government does not allow personal pension plans for indiviuals. Those type of plans could travel with you to each job.IRAs and 401ks all have a cap on contributions even if they are Roth. Why?

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    Default Re: Can you afford to retire?

    Completely off the subject, but people would be amazed at the outcome of putting as little as 50 bucks a month in a roth IRA... I will not ever stick my money in a company 401(k) plan ever again, I'd rather invest myself than run the risk of losing my money because a corporation fails.


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    Banned Melonie's Avatar
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    Default Re: Can you afford to retire?

    When a person retires or reaches the age 70 1/2 for IRAs they have to start drawing money out of these accounts. They do not have to draw it all out. It makes not financial sense to withdraw the whole amout because of taxes and the fact most other types of accounts have lower rates of return. I do not think a mass exodus will occur.
    If you consider this in relative terms, baby boomer holders of IRA's typically spent 40+ years building up their IRA holdings i.e. buying stocks. Those same baby boomers are going to have to start selling their IRA holdings to obtain cash when they retire. I agree that this won't occur as a massive selloff. However, it will occur over a 10 year or max 20 year period between the time they retire and the time they die. This constitutes a rate of selling pressure which is 2-4 times as high as the buying pressure over the previous 40+ years. Additionally, you've got the demographic factor to consider i.e. there will be fewer young people entering the job market than there will be baby boomers leaving the job market (or at least fewer young people with large enough prospective incomes that will allow for substantial IRA contributions).

    Taken as a whole, this will clearly mean that more stock shares will be put up for sale than there will be eager buyers bidding for those shares - which will drive stock prices downward. Once baby boomer retirees start to see the value of their IRA portfolios dropping by 10%, 20% or whatever, this COULD start a stampede of stock share selling before their IRA's lose even more value. I would also remind you that there ARE other options for investing IRA assets besides stocks ... for example gov't bonds, precious metals, even real estate - and doing so under an IRA umbrella would not immediately trigger tax consequences.

    As far as changing the rules on Social Security, I doubt it would be that easy.
    based on political themes which are currently enjoying increasing popularity, this could be VERY easy. How difficult would it be to sell the concept to the 51% of future Social Security recipients who didn't / couldn't set aside a large IRA / 401k retirement nest egg that they need to vote on the following ...

    A. with future Social Security cash flow account deficits bleeding red, every Social Security recipient including themselves needs to have their monthly Social Security check cut in half, OR

    B. since the 'rich' can afford to finance their retirement without a Social Security check, establish a 'means test' such that people who didn't / couldn't set aside a large IRA / 401k retirement nest egg will still receive their full Social Security check, while those 'rich' enough to have set aside a lot of 401k / IRA money over the years won't receive a Social Security check at all as long as they have IRA / 401k assets to liquidate in order to pay for their own retirement.

    I'm betting that the same media and political forces which are currently publicizing the excesses of corporate 'fat cats' will push heavily for option B. Of course, they'll neglect to mention that their definition of 'rich' also includes middle class people who have scrimped and saved over the years to build up a significant IRA / 401k nest egg.

    What I do not understand is why companies are not forced to fund their pensions. With some pension plans employees pay into it but companies are not forced to transfer that money to the plan. It makes no sense. Tax payers pick up the bill in the end.
    because, given the relative costs of doing business in the USA versus offshore alternatives (taxes, benefits, OSHA/EPA compliance), US companies simply cannot afford to fully fund their defined benefit pension plans any more without risking bankruptcy. This is the essence of the Delphi/GM/US airline problem. A gov't order mandating full funding of pension promises would sink every one of these companies, putting all of their workers in the unemployment line as well as causing massive disruptions in other areas of the US economy.

    In fairness, keep in mind that it takes 40 years or so for pension funds to build up. In the last 40 years, life expectancies, health care costs etc. have simply skyrocketed. Also in the last 40 years, inflation has taken a terrible toll on the US dollar's purchasing power. Thus while employers started out targeting an asset range of say $250,000 per retired employee as a 'full' funding level, increasing life expectancies, escalating medical treatment costs, and devaluation of the US dollar have turned that $250,000 target into a mere 'pittance' in regard to financing a retiree under today's financial conditions. Unfortunately, these employers do not have access to a 'time machine' which allows them to go back 20-30-40 years and adjust their pay rates and pension promises / contributions based on today's financial conditions which nobody at that time would have thought possible. Similarly, the 'time value of money' interest earnings equation means that a 5% shortfall in employer pension contributions made 20-30-40 years ago is virtually impossible for the employer to make up for in a 5 year period just prior to retirement.

    Also just to clarify, any retirement contributions made directly by employees to their pension plans ARE fully funded by definition ... it is only the 'intangible' employer contribution which the employee is NOT specifically charged for where the question of insufficient funding comes up.

    IRAs and 401ks all have a cap on contributions even if they are Roth. Why?
    because all tax favored retirement accounts (even Roth where the interest and dividend earnings are tax favored even if the original contribution is not) costs the US treasury tax receipts. The current caps were established in order to limit the magnitude of this 'retirement fund tax shelter' available to the 'rich'.
    ~.
    Last edited by Melonie; 05-21-2006 at 09:14 PM.

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    God/dess Deogol's Avatar
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    Default Re: Can you afford to retire?

    Let me add that with increasing globalism - we have competitors who have no sense of retirement for their workers.

    Like the show says - companies are getting by with putting 49% into retirement accounts - yet countries like Indonesia and the like will have companies putting in 0% into the retirement accounts of their people.

    Europe has a different way of funding their retirement - those big high taxes and incredible red tape.

    Meanwhile, we in the new world can see companies focusing on hiring employees for manufacturing (and now research and development) in countries like China and India, etc. This means they don't need to worry about these funding issues because they simply do not exist and the people there don't really expect them to exist (at least yet.)

    So even if it came down to corporations paying zero taxes - they still would be saving money by hiring non-US workers because of those retirement funding issues - especially if SS is reworked - who cares? Their workers will be in other countries for companies run out of a PO box in the Cayman Islands.

    And lets not forget those 401k's like Enron's. I don't think that lesson has been learned yet by many people.

    Given the fragility of the US stock market (in terms of globalism and the debt etc.) I worry about my IRA. Is it going to be like that couple that watched their value decrease by 50% right when they needed it?

    I mean the macro-economics of the American Capitalistic System is quite shaky right now because we are continously not allowing the participants to pay their dues and their part of the cost of living in the US.

    (Aka those guys getting nearly half-billion dollars in retirement, the thrusting of old world economics on US - you can read that as OIL ECONOMY - and all those people who control the money setting themselves up with seperate retirement systems than the rest of us.)

    I can already see the living standard around me changing - and when the housing goes kaput. It is going to become far more obvious to so many others too.

    There will be screaming in the streets "Bring back the guillotine!"

    Well - hopefully it won't be that dramatic.

    But people are already learning it doesn't matter how long you have been loyal to a company - how many hours put in and family/life sacrifices made (so those CEOs can get 400x more pay) - or how educated they have become (on their own dime, rrrr, quarter, these days) - or even if their area is profitable! I have seen departments and plants that were profitable get shut down in the US and sent over seas so they could be even MORE profitable.

    There is going to be a huge ass backlash on this in the coming years... and knowing my luck it will probably occur once I scramble back up to the top again (there was a time when I was in the top 5% of INCOME earners.)

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    Default Re: Can you afford to retire?

    ^^^ the top 5% of EARNED INCOME earners is exactly where you DON'T want to be, Deo ! That is a guaranteed path to the slaughterhouse in regard to taxation. Like the 'rich', your income needs to be passive not active (i.e. royalties, capital gains) so that your effective tax rate winds up being 15% instead of 40%+. This will be even more true in the future when the gov't must resort to taxing retirees in order to avoid deepening deficits (i.e. a national sales tax, consumption tax, tax rule change on 401k / IRA withdrawls etc.)

    Once the economic realities of gov't guarantees of defaulted pension payments, social program spending for future retirees etc. starts to hit the gov't budget, I fully expect that the US will follow along European precedents ...



    (snip) "The German parliament on Friday adopted a controversial hike in value-added tax in spite of warnings from economists and business leaders that the move could snuff out Germany's fragile economic recovery.

    Legislators from chancellor Angela Merkel's ‘grand coalition' government forced through the three percentage point increase to 19 per cent, that is now scheduled to take effect from January 1 2007."(snip)

    yup that's right a 19% German national sales tax, on top of already existing income taxes and local taxes ! That's 19 Euros (re)collected in tax on every 100 Euros spent out German retirees' corporate / gov't retirement and/or benefit checks.
    !
    Last edited by Melonie; 05-21-2006 at 09:38 PM.

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    God/dess Deogol's Avatar
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    Default Re: Can you afford to retire?

    ^^^ You can say that again! Like I tell people - I did a lot of working to pay a lot of taxes. I learned the difference between "wealth" and "income" in those years.

    I am still pissed off about how much I worked only to have every fucking government person there with their hand out.

    I have had so many eye opening experiences to the reality of the US system compared to the "common wisdom" about the US system. As may be somewhat obvious - I am a "disillusioned capitalist."

    ----

    Referring to Germany, I expect there to be a day when backyards are filled with "retirement gardens" much like they were filled with "victory gardens" during the tight times of WW II.

    Only there won't be a big bonus at the end when the enemy submits. It will be the fucking stone age.

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    Veteran Member StuartL's Avatar
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    Default Re: Can you afford to retire?

    The stone age ... there's a thought!!

    If I might echo something that Melonie mentioned earlier in this thread, about government altering the retirement rules mid stream as it were, I have an example.

    In the UK on April 6th this year a new set of pension rules came into force. This was called 'A' Day. Pensions are becoming a big issue in the UK and the rules are meant to simplify the system. The UK problem (one of many) is that each new government to power introduces a new set of rules to 'leave their mark' on the pension industry. I think there are six sets of rules in place now... The 'simplification' has pared these rules down to around 4,000 pages!!!!!

    Under the old stakeholder system (personal pension planning), it was possible to retire at age 50 if you had enough money in your fund to support yourself. The state scheme, for what it's worth, is paid to those over age 65. However, the government quite rightly feels that people will need to retire at an older age in the future. So under the new rules, you can only retire using your stakeholder scheme at age 55 or later.

    Sure, it doesn't sound so bad, an extra 5 years. But if you can afford to retire at age 50, why shouldn't you if that's what you want?

    The irony is that figures show that only about 10% of people still willing and able to work at age 65 can find work! Yet the plan for most, especially those in their 20's and 30's currently, seems to be that 'Ill work when I'm older'. It is all amazingly short sighted.

    As you know, I work in finance. I have a pension. I don't save a fortune, I'm not loaded and don't earn mega bucks so I save what I can. Despite this, I have friends back in the UK that save nothing. They are past 30 now. I know that I don't save anywhere near enough, but I have friends that I save 10x more than!!!

    The stone age comment might just be right! We (the royal 'we') are heading to some horrible places.

    PS - to Melonie. In Europe, the 'top' rate of VAT is 21% (in, I think, three countries).

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    Featured Member Vamp's Avatar
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    Default Re: Can you afford to retire?

    Please excuse me, my computer hates the quote button so i will do it the old fashioned way.

    Melonie:i.e. there will be fewer young people entering the job market than there will be baby boomers leaving the job market (or at least fewer young people with large enough prospective incomes that will allow for substantial IRA contributions).

    Yes but another factor is that people are working longer and longer. People are working well into they sixties now.There is alot of variables to this issue. It will be interesting to see how it plays out.

    The thing about changing Social Security is that everyone pays into it unless you opt out. What incentive would the rich have to pay into social security when they wouldnt recieve anything back? Without their contributions would Social Security be able to cover the folks in the means test at all?

    I do not think that GM/Delphi went bankruprct because of their pension programs. They had horrible management decisions. They blew money like water when times were good.

    For an example they had what they called a job pool. The job pool was a group of workers that had been laid off .They were held on retainer if someone retired or was fired for a replacement. Thing is these people recieved a normal salary for doing nothing and waiting for work. They could not be worked for any reason other than if someone retired or was fired. I am sure it was partically created by the unions and GM. But what company in their right mind would agree to that? This is just one example of wasteful spending on GMs part. They dipped into the pension time and again to pay their bills and look profitable.

    Companies use pensions to stay afloat when they hit bottom. That is insane. Companies are using bankruptcy to break contracts with employees and their pensions. If a company goes into bankruptcy and you a younger employee that contributed to your pension, they disolve your pension and take that money. All the while CEOs and other execs are keeping all of their pensions and perks.

    IRA's can also be invested in CDs. Granted the rate of return is less, but the level of risk is alot lower.

    Instead of living on credit, home refinance, and well beyond our means, i think people need to be more responsible. Alot of people are just trying to keep up with the neighbors by getting the bigger better car, house, boat, etc. People buy into hype and advertising. We need to go back to the financial values of the great depression generation.

    Globalism gives workers less leverage for workers and more for the companies.

    There is a great satrical cartoon about globalism http://www.jibjab.com/JokeBox/JokeBo...px?movieid=122

    Look for the Big Box Mart cartoon. Puts it all in perspective.

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    Default Re: Can you afford to retire?

    I was with a company for nearly 20 years and utilized their 401 k and it was or is at this time well worth the investment . If I hadn't of used this system provided by the company I would of most likely not had any of the money now . I used some along the way for home improvements and a new car or two and paid myself back with interest . Yes I sometimes worry about the stock market but in reality anything can happen with your money in this economy thats kind of what makes capitalism work doesn't it . Its not a perfect system but better then any I have seen out there . We face risk everyday in life without money being introduced into the equation but isnt that what makes life so damn interesting ? btw - where is Monty ?

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    Default Re: Can you afford to retire?

    The thing about changing Social Security is that everyone pays into it unless you opt out. What incentive would the rich have to pay into social security when they wouldnt recieve anything back? Without their contributions would Social Security be able to cover the folks in the means test at all?
    In point of fact, 90+% of Americans do not have the option of 'Opting Out' of the Social Security System. Those few that do are generally federal gov't workers or elected/appointed officials. Obviously, if it were possible to do so, the 'rich' would already be opting out of the social security system since the effective rate of return on a maximum contribution income is now less than zero (i.e. total cash paid into SSI from this point forward is greater than the total promised benefit checks with zero interest being earned on the money paid in). From this point forward, all 'middle class' Americans clearly understand that SSI is not a retirement system but a tax and benefit system that exists outside of the general federal budget. All 'middle class' Americans clearly understand that a portion of their mandatory tax contribution is being transferred to subsidize the benefits of lower income workers' retirement. Thus in reality, the introduction of a 'means test' would only alter the ratio of transfer/subsidy.

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    Default Re: Can you afford to retire?

    Means testing is a nightmare. It's value can be questionable at best. It is used in several EU nations. The trouble is, that if you are not quite poor enough to qualify for means testing but you can afford to save for retirement, you have no incentive to do so. By spending the little spare cash people have, they can then qualify (via means testing) for a bigger state retirement.
    I was chatting to a pal of mine a few weeks ago about it. He is a pension planner in the UK. Apparently, it is now 'best advice' to tell those wishing to save for retirement (in their 20's and 30's) to not save and start a pension if they are 'borderline' re means testing. It is very odd. They may not be borderline when they come to retire. The means testing rules may have changed. With hindsight, they would have needed to save, but didn't and so missed the opportunity. But right now, that it seems is 'best practice'.
    These kids may spend years not saving with the impression that 'I don't need to' and then get an even ruder awakening in years to come.

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    Default Re: Can you afford to retire?

    These kids may spend years not saving with the impression that 'I don't need to' and then get an even ruder awakening in years to come.
    Stuart, where the USA is concerned, the 'kids' already find themselves facing a dis-incentive in regard to effort/earnings levels versus after-tax after-benefit standard of living. As I stated earlier, today's young Americans basically face a financial 'dotted line' at about the $25,000 per year earnings level. Below this level, they are generally eligible for an array of social welfare programs stemming from subsidized rent payments to subsidized utility payments to 'free' food to 'free' medical care. Also, below the $25,000 earnings level, they essentially pay no income taxes. However, as the earnings level gradually increases from $25,000 to say $40,000, eligibility for social welfare benefit programs goes away, effective income tax rates start to rise above zero etc. Thus the after-tax after-benefit standard of living of a young American busting his ass to earn $40K isn't noticeably higher than a counterpart earning $25k and collecting benefits and subsidies. The only actual difference is that the $40k earner is likely to be extended credit so he can 'overspend' his actual income, while the $25k earner will be denied credit. As far as a 'surprise factor', young Americans can definitely see what's happening in this area.

    IMHO the far larger surprise is likely to befall the near-to-retirement baby boomers. They have spent most of their working lives with a somewhat unrealistic expectation that the promises of the US Social Security system will be kept (i.e. that they'll actually be allowed to retire at the previously stated retirement age, that they'll actually receive a Social Security check monthly for the full value as calculated by a past earnings/contributions formula), and that the original 'tax shelter' rules which applied to gov't sanctioned private retirement accounts like 401k's and IRA's will remain unchanged until they're actually able to retire and start withdrawing 401k and IRA money.

    Unfortunately, the realities of US demographics and global economics can't be avoided forever. As I also mentioned earlier, this year is the first time that SSI+ medicare payouts have exceeded SSI + medicare tax receipts. There are only three ways out of this ... cut benefits significantly, raise taxes significantly, or continue to print more dollars and issue more US gov't bonds to foreign investors to finance the shortfall.

    IMHO the US gov't will utilize a combination of all three elements. On the 'cut benefits' end, the retirement age will continue to be raised. A 'means test' for Social Security monthly check eligibility versus 401k and IRA assets will likely be instituted.

    On the 'raise taxes' end, some method will be devised of leveeing additional tax on the 'tax sheltered' IRA and 401k money being withdrawn by future retirees ... most likely by institution of a new 'consumption/national sales tax/VAT'. The reason that a stiff national sales tax is likely to be pushed hard is that it is really a 'stealth' method of taxing every IRA/401k dollar withdrawn, every Social Security check dollar, every welfare/benefit check dollar, as well as actually collecting some positive tax revenue from those 'kids' earning less than $25,000 per year.

    On the 'print money' side, there is no question in my mind that inflating the US dollar thus devaluing the debt burden for all Americans is the only available option to prevent widespread bankruptcies as taxes are increased and interest rates rise. Of course this will attract more foreign investment money, but it also will create an even larger dis-incentive for American savers (who will receive less in interest earnings on their savings than they lose in future US dollar purchasing power).
    Last edited by Melonie; 05-23-2006 at 08:24 AM.

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    Featured Member Vamp's Avatar
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    Default Re: Can you afford to retire?

    Printing more money will just lead to inflation. Inflation will just eat up any gains that could be made by devaluing the dollar.

    http://www.sltrib.com/business/ci_3839895

    I think this all just dancing around the real issue. The real issue is how we got into this mess to begin with. Instead of continuing to walk down the same road expecting differant scenery we need real change. It is time we started turning back the clock. We need to reign in this race to the bottom with globalism, set real laws in place that make sure companies are socially responsible, and have a system of fair trade not just for other countries but for American workers too.

    We can be totally responsible doing all that we need to for our financial future, but as long as this run away train continues we will still be run over on the tracks.

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    Banned Melonie's Avatar
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    Default Re: Can you afford to retire?

    The real issue is how we got into this mess to begin with. Instead of continuing to walk down the same road expecting differant scenery we need real change. It is time we started turning back the clock.
    so far I'm agreeing with you completely

    We need to reign in this race to the bottom with globalism, set real laws in place that make sure companies are socially responsible, and have a system of fair trade not just for other countries but for American workers too.

    We can be totally responsible doing all that we need to for our financial future, but as long as this run away train continues we will still be run over on the tracks.
    But now you've effectively contradicted everything you said previously ! The major reason that previous generations of American workers were able to lead a high standard of living boiled down to a handful of issues. If someone lost their job, they got some charity handouts from a soup kitchen but little else, which prompted them to A) travel to other areas of the country where jobs are available, B) accept whatever type of work was available in their area, C) work as many hours as was necessary to provide for themselves and their families. Today's social welfare system has killed this sort of motivation as experienced by previous generations.

    American companies of generations past were competitive on a global basis because they were basically able to use the same manufacturing processes, work their employees the same number of hours, and provide their employees the same type of benefits as their global competitors. However, today's environmental, workplace safety, gov't mandated benefits, minimum/prevailing wage laws etc. create large additional costs for todays American companies versus their global counterparts ... guaranteeing that they cannot be competitive at any enterprise which can also be conducted overseas. Mandating 'social responsibility' can also be translated to mean 'mandating bankruptcy' ... which is the motivation for US companies to transplant or outsource work formerly performed in the USA.

    The only way that we can 'do all that we need to do' is to erect literal as well as figurative walls along America's borders and coastlines, to re-establish a self-contained economy within the USA (which has not existed for the past several generations), to block foreign competition which operates by different (or non-existant) rules, and to operate as a totally separate system from the global economy. While this is theoretically possible, I suspect that the achievable standard of living would be vastly reduced compared to the typical standard of living which exists today as the result of 'underpriced' imported goods and services.

  18. #18
    Featured Member Vamp's Avatar
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    Default Re: Can you afford to retire?

    Quote Originally Posted by Melonie
    so far I'm agreeing with you completely



    But now you've effectively contradicted everything you said previously ! The major reason that previous generations of American workers were able to lead a high standard of living boiled down to a handful of issues. If someone lost their job, they got some charity handouts from a soup kitchen but little else, which prompted them to A) travel to other areas of the country where jobs are available, B) accept whatever type of work was available in their area, C) work as many hours as was necessary to provide for themselves and their families. Today's social welfare system has killed this sort of motivation as experienced by previous generations. .
    Do you really believe that instead of looking for work else where they just get on welfare? People travel for work all the time. Not everyone in America is dying to get in a welfare line. People do work for less, work two or three jobs and would do anything to provide for their families. You really have a low opinion of people if you really believe what wrote.

    Quote Originally Posted by Melonie
    American companies of generations past were competitive on a global basis because they were basically able to use the same manufacturing processes, work their employees the same number of hours, and provide their employees the same type of benefits as their global competitors. However, today's environmental, workplace safety, gov't mandated benefits, minimum/prevailing wage laws etc. create large additional costs for todays American companies versus their global counterparts ... guaranteeing that they cannot be competitive at any enterprise which can also be conducted overseas. Mandating 'social responsibility' can also be translated to mean 'mandating bankruptcy' ... which is the motivation for US companies to transplant or outsource work formerly performed in the USA..
    American companies also paid a larger of percentage of profits to their employees. They didn't jump ship to China when there was a strike. They also didn't outsource the majority of their jobs. I could go on forever. There are many companies like Costco and Ben and Jerry's that are socially responsible and not bankrupt. Companies use globalism as an excuse to do whatever they want.

    Quote Originally Posted by Melonie
    The only way that we can 'do all that we need to do' is to erect literal as well as figurative walls along America's borders and coastlines, to re-establish a self-contained economy within the USA (which has not existed for the past several generations), to block foreign competition which operates by different (or non-existant) rules, and to operate as a totally separate system from the global economy. While this is theoretically possible, I suspect that the achievable standard of living would be vastly reduced compared to the typical standard of living which exists today as the result of 'underpriced' imported goods and services.
    No one said anything about that. Enacting laws that force companies that have pensions to maintain them so that the tax payer doesn't have to foot the bill, making sure companies provide some form of health care, 401ks that include money market and Cds for low risk options, and encouraging companies to do this and keep jobs in America thru tax breaks would be a good start. Instead this country does the complete opposite. We can be apart of the global market and still retain our sovernity.
    Last edited by Vamp; 05-23-2006 at 11:41 AM.

  19. #19
    Banned Melonie's Avatar
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    Default Re: Can you afford to retire?

    Do you really believe that instead of looking for work else where they just get on welfare? People travel for work all the time. Not everyone in America is dying to get in a welfare line. People do work for less, work two or three jobs and would do anything to provide for their families. You really have a low opinion of people if you really believe what wrote.
    You might want to check the Michigan state budget for unemployment and welfare expenditures ! Yes some people will pull up stakes and move to 'greener pastures'. But many others will exhaust their unemployment benefits and then collect social program benefits while making a half-hearted effort to seek alternate employment in the same geographic area.

    Enacting laws that force companies that have pensions to maintain them so that the tax payer doesn't have to foot the bill, making sure companies provide some form of health care, 401ks that include money market and Cds for low risk options, and encouraging companies to do this and keep jobs in America thru tax breaks would be a good start
    there aren't enough tax breaks in the world to make US companies who must pay American wages and health benefits and pensions competitive with foreign companies who don't. Again, a noble theory, but the numbers simply don't work as long as the foreign companies can ship their 'underpriced' product into America so that Costco and WalMart can sell it for less than the US company's cost of production.

    As to the reason that Ben and Jerry's is profitable ... it's the same reason that Porsche or Louis Vuitton or Penthouse Executive Club is profitable ... specialty product appealing to an upscale niche market of very low overall volume for their industry.

  20. #20
    Featured Member Vamp's Avatar
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    Default Re: Can you afford to retire?

    Since when has unemployment benefits been considered a welfare hand out? Unemployment was created to help laid off workers until they could find work. If anything companies milk unemployment. Plants that shut down annually have their employees draw unemployment for that time period.
    Not everyone is eligible for welfare. A single man can not walk into a welfare office and walk out with a check. The majority of welfare goes to single mothers. I am talking about the real welfare program; not social security, SSI, or anything else you may group with it. Most people in this country work hard. That is how we got where we are today. Once again to say that people that are out of work just get into a welfare line is an elitist attitude.

    What about companies using temp and part time workers so that they do not have to pay them benifits or full wages. Many of those people end up working two of those jobs. If they have a major illness and end up in the hospital, is that them milking the system or the company milking the system?

    Walmart has used strong arm tactics for years with their suppliers to send jobs over seas. It isnt because they would end up being less competitive. In most cases it is less than a dollar difference in the price of the item. It really boils down to how much more in profits they want to make. You talk on and on about what would cause companies to go bankrupt but take no look at what causes the consumer/worker to go bankrupt? Without a strong pool of consumer/workers companies will still fail.

    I never considered Ben and Jerrys on the same level as a Porshe either lol. When I go down the aisle the shelves have alot of differant ice cream. Mabye they are profitable because they sell a good product at a good price and still they can be loyal to their workers. Wow what a concept!
    Last edited by Vamp; 05-23-2006 at 06:05 PM.

  21. #21
    Veteran Member StuartL's Avatar
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    Default Re: Can you afford to retire?

    It's hard not too see both sides of this discussion. In different ways, you are both very right. The upshot of all this is that we are all in trouble.
    There are so many issues that contribute to where we are and are headed that I don't think these problems can be sorted out without anything but massive social and economic pain.
    Back to the original question - can we afford to retire? the answer is slowly simplifying. There is (or will be) no guaranteed help in the future. It will be 'every man for himself' and only the prepared will be able to survive adequately. Simply, without substantial advanced preparation, much of the western world will be eating in soup kitchens in the future.
    I guess there is one thing that we can be happy about ... if we are able to see this now, from here and be discussing it, we are probably amongst the small % of society that will be preparing and thus slightly less impacted. Selfish, I know. But it's real.
    The trouble is, if we are the ones who are prepared, we will still suffer. We will be the ones who end up supporting short sighted friends and relatives that didn't bother to save for 30 plus years. It's all bad!!

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    Banned Melonie's Avatar
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    Default Re: Can you afford to retire?

    The trouble is, if we are the ones who are prepared, we will still suffer. We will be the ones who end up supporting short sighted friends and relatives that didn't bother to save for 30 plus years. It's all bad!!
    Stuart has hit on the ultimate bottom line in this arena. If a 25 year in the future crystal ball was available, we would know the answer as to whether saving / investing for retirement makes economic sense, or whether saving / investing for retirement will turn out to be a futile exercise (where every dollar saved for retirement results in a lost dollar of future gov't benefits).

  23. #23
    Banned Melonie's Avatar
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    Default Re: Can you afford to retire?

    some interesting statistics showed up in the media today ...

    " By Dennis Cauchon, USA TODAY

    Taxpayers owe more than a half-million dollars per household for financial promises made by government, mostly to cover the cost of retirement benefits for baby boomers, a USA TODAY analysis shows.

    Federal, state and local governments have added nearly $10 trillion to taxpayer liabilities in the past two years, bringing the total of government's unfunded obligations to an unprecedented $57.8 trillion.

    That is the equivalent of a $510,678 credit card debt for every American household. Payments on this delinquent tax bill must start soon if financial promises to the elderly are to be kept.(snip)


    Taxpayers are responsible for more than $500,000 per household for unfunded financial promises made by federal, state and local governments. How the debt breaks down:

    Program Liability per household

    Medicare $263,377
    Social Security $133,456
    Federal debt $42,538
    Military retirement benefits $25,443
    State-local debt $16,395
    Federal employee retirement benefits $14,256
    State-local retirement benefits $13,257
    Other federal $1,956

    Total $510,678

    (snip)




    the sad reality here is the actual effect on younger workers if and when the gov't actually starts collecting on the 'debts' owed by the US general tax budget to the Social Security /Medicare system and the other retirement budgets in order to continue paying benefits at 'promised' levels. Even if the $500k+ owed per US household were collected over 30 years, this would still add some $15k per year per household in additional tax liability ... over and above the ongoing taxes already being collected to fund federal, state and local gov't needs other than SSI / medicare / retirement.

    Stop and think for a minute just exactly what this will mean to an average American family 5-10 years from now. Out of the $600-$1000 after-tax weekly paychecks that they will typically be earning, an additional $200-400 per week will have to be taxed away to fund Social Security and medicare benefits which are already promised to retiring baby boomers. When this day arrives, the question will boil down to reducing promised benefits to retirees significantly, or effectively wiping out the 'middle class' who are still of working age.

    If retiree benefits are not reduced, such that the money 'borrowed' from the Social Security / medicare system must actually be repaid out of general tax revenues, this will basically mean that a 'middle class' family grossing $75k per year, having to pay all of these taxes plus their own rent/mortgage, utility bills, grocery bills, medical bills etc. will see little or no improvement in lifestyle over people earning $25k per year while collecting benefits from social welfare programs.

    Obviously, future working families will 'revolt' before agreeing to bear this additional tax burden ... virtually guaranteeing that baby boomer retiree benefits (which weren't all that high to begin with) are going to be reduced in a big way.
    ~
    Last edited by Melonie; 05-26-2006 at 12:28 AM.

  24. #24
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    Default Re: Can you afford to retire?

    *I gave someone heartburn today talking about this subject*

    I imagine the US will go the way of Latin American culture in how families will have to be more interdependent on eachother when government institutions fail them....for example, Life Magazine did a recent pictoral cover story on how families are having more kids on average than the last generation did...to cash in on tax writeoffs, and use their offspring as flesh-and-blood "Social Security."

    Let's squeeze some optimism in here....if Latinos & the Irish can live on a shoestring happily, there's hope yet. Or, there's "Soylent Green"... LOL

    PS Someone mentioned Ben & Jerry's Ice Cream...I met 2 former B&J employees when I was in New England, and they told me UniLever Corp. fired everyone & razed employee rights when they bought the company...needless to say, I don't buy B&J anymore.

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    God/dess Deogol's Avatar
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    Default Re: Can you afford to retire?

    Quote Originally Posted by madmaxine

    PS Someone mentioned Ben & Jerry's Ice Cream...I met 2 former B&J employees when I was in New England, and they told me UniLever Corp. fired everyone & razed employee rights when they bought the company...needless to say, I don't buy B&J anymore.
    Sad story alright:

    Forced by laws governing publicly traded companies, and a shareholder suit to enforce those fiduciary responsibilities by the board of directors, Ben & Jerry's Homemade Inc, based in South Burlington, accepted a whopping $43.60 per share offer from Unilever, the giant Dutch/British consumer products company.


    If ya wanna stay in control of your company - DO NOT MAKE IT PUBLIC. Their mistake was "cashing in on Wall Street." Oh it starts out with porsches and new houses but tends to end with layoffs and plant closings.

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