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A preview of the U.S. without pensions

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Re: A preview of the U.S. without pensions

#181

Post by socialist_coder »

cryptonector wrote: post #178
jo909 wrote: post #109

> The average life expectancy in 1950 was 68, meaning that a pension had to pay out only three years past the typical retirement age of 65. Today, average life expectancy is about 79, meaning that the same plan would have to pay out 13 years past typical retirement age. That's the wrong statistic to use and completely wrong conclusion. Life expectancy _for a 65 year old_ person in 1950 was another 13.9 years. That ro…

Early deaths help pension plans too, since those people will never draw from the plan. So, yes, average life expectancy is relevant here.

I think you're missing the point. Someone who dies at birth brings down the average life expectancy but does not affect pension funding at all. Read the other comments for more examples.

Re: A preview of the U.S. without pensions

#182

Post by snuxoll »

gedy wrote: post #179
lewis500 wrote: post #105

Earlier quoted context omitted.

By "a few years" I mean about ten or eleven years ago. Fortunately, that means they bought most of their stocks since 2008 and have gotten great returns. They were also fortunate to buy a house in a good neighborhood during the bottom of the slump, and to live in a cheap state. So they can sell their house and almost pay cash for a modest house a little further out from the city. Fortunately, the city has relatively…

Good for them, but do you see how this is essentially a gamble? Had they done the same 5-6 earlier they'd have lost a lot in both investments and real estate in 2008.

Recessions like 2008 are part of the normal ebb and flow of the markets, and we're likely heading into another one (though hopefully not quite so bad). 5-6 years earlier wouldn't have made a noticeable difference unless they were planning on retiring between 2008-2012ish, the markets have recovered after all.

Personally, if I see the stock market dip like that again I'm going to double down on my 401(k) contributions.

Re: A preview of the U.S. without pensions

#183

Post by MisterBastahrd »

RobertoG wrote: post #119
alkonaut wrote: post #80

Earlier quoted context omitted.

A declining/aging population is problematic but a stable one isn’t. And you need some buffers in the system to manage the variations in birth rates. I thought this type of system was the most common these days?

A declining/aging population could be not a problem if there is an increasing in productivity at the same time.

If wages were tied to productivity, that'd make sense. Workers today are vastly more productive yet lag behind when comparing wages to cost of living.

Re: A preview of the U.S. without pensions

#184

Post by snuxoll »

maerF0x0 wrote: post #162

IMO a major issue is the expectance of someone else to take care of "me". I know that I'm retired for ~30 out of 80 years of my life and thus have to save ~3/8ths of my income, else starve. (Yes, some modifiers for tax brackets, compounding blah blah...) In the past people's children were the "investment" that paid the dividends into old age. Now we no longer have children to bear the burden. Yet we spend the normall…

Jobs are a huge motivation in paying for the retirement of our senior citizens. The more people we can get to go into retirement the more jobs are open for the younger generations, and then we also get the societal feel good of taking care of the elderly after they've (likely) worked their butts off for 40+ years.

Well, at least until the robots come - then retirement will be the least of our issues.

Re: A preview of the U.S. without pensions

#185

Post by zanny »

hkmurakami wrote: post #66
aramadia wrote: post #5

And the best part is that the next generation will have it even worse. They’ll have 75% Social security payments, little chance of building net worth through home purchases and a lifetime of $10/hr jobs.

Perversely, it may not be the worst thing if an entire generation decides that building wealth through your primary residence is not the best idea, and forgoes this in their lives and pushes their representatives to repeal the slew of incentives currently written into the tax code.

Property ownership as your sole investment apparatus is obviously flawed, but seeing the ownership of all land and property centralized even further into the hands of land barons and oligarchs who can afford to rent seek an entire population is much worse.

There was a lot of misguided misdirection in trying to sell every US citizen on home ownership, but there was also a tinge of romanticism towards the principle that maybe everyone could have their own small slice of the pie rather than a few fat cats owning the whole thing with all of us begging to borrow a piece.

Re: A preview of the U.S. without pensions

#186

Post by saryant »

jstewartmobile wrote: post #18
wildmusings wrote: post #6

Defined benefit plans, i.e. pensions, are a total disaster. They are premised on a fantasy: that the pension fund will make enough money on the market to to pay its liabilities, or that the backing entity will bail it out if not. Those are bad assumptions. The result is pension funds going broke across the country, and it's just getting started. Defined contribution plans, 401k's and such, are much more sensible. You…

I'm not sure 401ks are so great. Many charge ridiculous management fees for funds that track mundane things like the S&P 500, but if you want that employer match, no way around it. Mostly a case of perfectly intelligent people throwing wads of money into the market on autopilot because that's all the 401k lets you do. Lambs to the slaughter! edit: Example: Back when I was on 401k, was into a S&P500 fund that had an e…

Employers should absolutely stop offering high-fee funds. Large employers should be offering institutional funds.

My employer uses Vanguard and gives us access to Vanguard's institutional S&P500 fund at 3.5 basis points. Our plan rules also allow for in-service contributions from existing IRA assets so I've been moving all my IRAs into my 401k for access to these cheap funds.

Re: A preview of the U.S. without pensions

#187

Post by mulmen »

maerF0x0 wrote: post #162

IMO a major issue is the expectance of someone else to take care of "me". I know that I'm retired for ~30 out of 80 years of my life and thus have to save ~3/8ths of my income, else starve. (Yes, some modifiers for tax brackets, compounding blah blah...) In the past people's children were the "investment" that paid the dividends into old age. Now we no longer have children to bear the burden. Yet we spend the normall…

So for the 10th percentile of earners dinner is an excess? Does this income allocation apply in the other direction? If I start selling $10,000.00 chicken sandwiches should the top earners by income buy from me because that's their place?

Re: A preview of the U.S. without pensions

#188

Post by clackanon »

It's nice to know someone can express a dissenting opinion, and still be reasoned with, and not downvoted into oblivion.

Oh. Wait. That's par for the course on HN.

God forbid you think anything different from the hive mind. If you do, you're not welcome here.

Re: A preview of the U.S. without pensions

#189

Post by suppressingfire »

mwfunk wrote: post #69
dizzystar wrote: post #50

Earlier quoted context omitted.

She was covered under military, then she was enrolled in ACA, then dropped multiple times.

How do does one get involuntarily booted from coverage provided by the ACA? Or did she voluntarily drop coverage? If the latter, that’s 100% on her, but if the former then that seems like it should be impossible and I’m very curious how it happened, that doesn’t make sense but then again neither does health insurance sometimes. :(

Could be that the plans or companies offering coverage in her region have changed from year to year? While I wouldn't call this being "dropped" others might.

Another possibility could be due to fraudulence during the application process?

But yeah, grabbing at straws here.

Re: A preview of the U.S. without pensions

#190

Post by brewdad »

jstewartmobile wrote: post #30
nunez wrote: post #24

Earlier quoted context omitted.

Yeah the only time it makes sense to have a 401k is if your company matches your contributions.

Don't they all have a match? It would be nice if people could keep the match and have more control over their portfolios. Buy & sell stocks, bonds, commodities, etc. whenever instead of a very small basket of mutual funds that can only be juggled a few times a year.

My wife's doesn't have a match per se. Instead the company contributes a lump sum annually that amounts to about 5% of her income. She wouldn't have to contribute anything to get this money and it doesn't count against her annual cap. It is accounted for separately from her contributions, so might technically not be a part of her 401k.
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