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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

#61

Post by danvayn »

lewis500 wrote: post #17

This is horrible. A few years ago I realized my parents were way behind on savings and just incessantly nagged them until they got on a good plan. They kicked and screamed the whole time ("You're our son. You can't tell us what to do."), but it's turned out to be one of the best decision I ever made. Next year they are actually going to retire. I dunno what I'd do if they had to work at Wal-Mart just to make ends mee…

Thanks for this! As a young guy I had absolutely no idea what social security checks entailed.

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

#62

Post by clackanon »

cmurf wrote: post #35

Today, Social Security provides only enough for a bare-bones budget, about $14,000 a year on average. Republicans: This is too much money, we can't afford it, it's take from the rich, give to the poor, these social programs need to end. Grandma deserves to die under a bridge by herself, it's her own fault she didn't work harder or save more. Me: A bullet to the head of the aging is more ethical than the Republican pr…

I'm not saying I have a better answer, but wealth redistribution is theft.

That's every bit as immoral as leaving grandma on the street.

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

#63

Post by zzleeper »

ec109685 wrote: post #53
ghufran_syed wrote: post #15

Defined benefit plans are unaffordable, whether for a company or a government. But while defined contribution actually generate great returns, they have the problem that urgent expenses always crowd out saving, particularly for lower income groups (same as it would if income taxes were collected annually, or less frequently). Seems like the optimal solution is to combine the compulsory contribution part of the curren…

Why are defined benefit plans always unaffordable? You don’t want people’s retirements to be affected by the value of their investment at the moment of withdrawal. Instead you want the benefit to incorporate the expected value at retirement of the investment over the long run. The problem with many pensions is that the businesses themselves supporting them essentially went belly up as competition, technology and inve…

For company plans, you said the answer. It's silly to assume that your employer will be alive when you are 80 year sold, and also seems like a stupid idea for a company in a completely unrelated business to get into the retirement fund mgmt business.

For states, the reason is population. If your pop doubles every 50 years, then you only need 2 young people to pay for one retiree. If it's the opposite (Japan now, US in a few decades), then you are screwed.

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

#64

Post by zzleeper »

konschubert wrote: post #52
rukittenme wrote: post #37

Here's a fun game for everyone. If you don't save, and your company doesn't save, and your government doesn't save then how the hell do you figure you're going to retire?

You can have a "contract of the generations", where the younger generation finances the pensions of the older generation through social security payments. Many countries do it like that.

To double down on what user5994461 said, that's indeed a ponzi scheme and quite stupid if you know current population trends.

It also creates quite perverse incentives, as older folks want to reduce their retirement age (even as they live way longer) and raise the contributions of younger people (to pay for the extra costs).

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

#65

Post by briandear »

zzleeper wrote: post #63
ec109685 wrote: post #53

Earlier quoted context omitted.

Why are defined benefit plans always unaffordable? You don’t want people’s retirements to be affected by the value of their investment at the moment of withdrawal. Instead you want the benefit to incorporate the expected value at retirement of the investment over the long run. The problem with many pensions is that the businesses themselves supporting them essentially went belly up as competition, technology and inve…

For company plans, you said the answer. It's silly to assume that your employer will be alive when you are 80 year sold, and also seems like a stupid idea for a company in a completely unrelated business to get into the retirement fund mgmt business. For states, the reason is population. If your pop doubles every 50 years, then you only need 2 young people to pay for one retiree. If it's the opposite (Japan now, US i…

So it’s a Ponzi scheme.

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

#66

Post by hkmurakami »

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.

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

#67

Post by hkmurakami »

konschubert wrote: post #52
rukittenme wrote: post #37

Here's a fun game for everyone. If you don't save, and your company doesn't save, and your government doesn't save then how the hell do you figure you're going to retire?

You can have a "contract of the generations", where the younger generation finances the pensions of the older generation through social security payments. Many countries do it like that.

Basically only works when you have a growing economy and a growing population.

Both things are sort of not true anymore in developed nations.

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

#68

Post by Joeri »

user5994461 wrote: post #59
konschubert wrote: post #52

Earlier quoted context omitted.

You can have a "contract of the generations", where the younger generation finances the pensions of the older generation through social security payments. Many countries do it like that.

That's a ponzi scheme. That's what many countries in Europe do and that is currently collapsing. It takes something like 4 active workers to pay the pension of 1 current retiree. The proportion was fine after the baby boom, it's not anymore and it's getting worse.

It's not a ponzi scheme, it's a numbers game. Basically the formula is: X * Y = A * B, where X is the number of retirees, Y the number of years they live past retirement on average, A the number of people who work, and B the number of years an average career lasts.

What is happening in europe is that the right-hand side of the equation is producing a lower number (due to later career starts and less actively working population), which requires reducing the left-hand side accordingly (by increasing retirement age or cutting pensions). The system cannot collapse (there's always a right-hand side), but it can require severe adjustments.

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

#69

Post by mwfunk »

dizzystar wrote: post #50
ec109685 wrote: post #46

Earlier quoted context omitted.

Why didn’t your coworker enroll in a ACA program?

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. :(

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

#70

Post by expertentipp »

user5994461 wrote: post #55
selestify wrote: post #38

Earlier quoted context omitted.

> More and more elderly to support > The younger population is suffering from vast unemployment It appears there is a lot of work to be done and a lot of idle workers to do it. The fact that both can exist in tandem seems like an indictment of how horribly inefficient our economic systems currently are.

Not sure what you mean. Retirees don't create jobs. They just get money handed to them monthly as promised by the pension formula decided decades ago. (that money is supposed to come from taxes on active workers's salaries) The whole system collapse when taxes are not enough to cover the pensions that were promised. It's a ponzi scheme.

> Retirees don't create jobs

They do in countries with extensive social systems. Look at Germany. There is boom for daycare services, retirement homes, various mobility devices, the country is sucking in females aged 40-60 from Poland employed (gray/black market mostly, I'm wondering who will take care of them in 20-30 years) to take care of Germany elderly, etc.

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