The second portion of the Barron's editorial commentary contained this little nugget;The Congressional Budget Office reported that payroll-tax receipts will barely cover Social Security benefits next fiscal year.
To repeat my tweet from yesterday about this; uh-oh.
Entitlements loom as a $50 trillion problem. The estimates about when it starts to run into trouble starts, I believe, in 2018 with some estimates call for it going under in 2042, if memory serves. Of course there are other folks who come up with much rosier scenarios. I don't know what is right all I can tell you is that I am not planning on having it--if I am wrong then all the better.
I write about this stuff every so often because I think it is important and interesting. I view it as a problem to be solved and I find learning about how others go about solving it to be very instructive. Over the years I relayed stories of how other folks are trying to figure this out which gets us to the above picture.
That is long time (very long time) Boston Bruins announcer Fred Cusick doing radio play-by-play for the Cape Cod Baseball League. Cusick retired from the Bruins in 1997 at age 78, did minor league hockey announcing for a while and now, at age 90, does the Cape Cod baseball. While it is safe to say announcing NHL games was not particularly lucrative when he started in 1952 it is also safe to say that save for something unusual (either behavioral or circumstantial) he does not need to work. For those who don't know the Cape Cod league is a very short season during the summer for college players.
While I don't think getting announcing jobs is particularly easy (Jerry Seinfeld and George Costanza cover this in an episode called The Revenge), part time or seasonal work in things you enjoy the most are not that difficult to find. Sticking with sports, Joellyn's retired uncle got a job offer a couple of years ago with a major league baseball team. The task would have actually tied in with his career, he ended up turning it down but it was not impossible to get. Here in Prescott we have three minor league teams each with three month seasons and a lot of the jobs go to people who appear to be of retirement age.
There is all sorts of seasonal work in tourism. I know that there are jobs at the North Rim of the Grand Canyon to be had for the summer--this must also exist at other national parks as well. If you can accept that this is a problem to be solved then you should also accept that finding the solution right for you (something you really want to do and can fit in with your lifestyle) will require ingenuity and take time to put together for yourself.
Aside from the mental and physical benefit working something close to full time for two or maybe three months a year is that it can be two or three months per year that you don't need to take anything out of your portfolio. Depending on what the market does relieving your portfolio of 20% of its income burden could make a monumental difference.
27 comments:
Your conservative approach makes sense, but in reality I believe the only ones who will have paid into Social Security and not receive benefits will be those who are means tested out. In case you didn't get the memo, we're living in the age of income redistribution. The vast majority will get something because politically it can't be any other way. They will be too many lazy people who feel entitled to their "entitlement" and won't think like you and find interesting part time work to smooth out the ride. And to be honest, they are entitled to it and should expect to receive it.
Education is key. Why they don't make personal finance mandatory in the public shcools is a crime.
Why they don't make personal finance mandatory in the public schools is a crime.great point
Mandatory summer school for life skills. Can common sense be taught
or can it only be learned by
experience? I read somewhere that
employers were having problems with
young workers because they aren't
able to think or plan ahead...
too much in the momment.
too much in the moment?
interesting choice of words. yoga stresses why being in the moment is a good thing.
as someone who does a little yoga i find that to be thought provoking.
"too much in the moment?"
I agree, we should live in the moment....but plan for the future
as much as possible.
About social security: Talked
with my mom and she has a few
friends that NEVER worked (like
herself) collecting s.s. from
deceased husband. Fine.....but
some of these husbands have had
3 and 4 wives and ALL of them
are collecting on his s.s.
That was an eye opener.....
Anon@8:24,
Are all the wives collecting equally, or is the "pie" sliced into 3 or 4 (as the case may be) pieces?
Roger- I know you are interested in endowment investing, attached is an interview with Meb Faber.
http://www.hardassetsinvestor.com/features-and-interviews/1/1523-how-to-invest-like-a-top-endowment.html
thank you for the link, I have a copy of Mebane's book and have not had a chance to read and review it yet.
Anon 11:18
My mom said each of the wives
are getting the same amount...
not divided. They had to be
married to the man for a certain
period of time to qualify.
I always thought only the first
wife got half (or?) of her husband's ss. Anybody know more?
Fortunatly many of us in America have second passports from more socialist countries that are not bankrupt and plan to return once we retire or in case America goes into an even deeper depression.
This allows us to not have to account for health care and other such costs in our planning.
If may be cheaper to "purchase" a second passport vs. investing the equivalent into the American stock market, if you pick the country properly you will end up ahead.
You can research Escape From America magazine for more ideas along that line.
That is where the smart money is in my opinion.
The dumb money is betting against the United States.
12:58 I certainly want you to be wrong but would not want anyone to be completely oblivious to the idea either.
One issue that seems difficult to really understand is health care. A fit 60 year has no idea what health services they will need in the future. The country I have given the most thought to about this (but not really that much thought)is New Zealand. Anecdotally I have heard some bad things but don't really know what it is like.
Some websites on the subject tell you to go to that country for six or 12 months and really get a feel for what it is like. could be expensive, but fun, if it turns out not to be a good fit.
Go ahead and run away, you're the kind of people our country doesn't need anyway. Better to have patriots who have "skin in the game" (served our country, pay our taxes etc.) left here to clean up. Take all the greedy bas***ds who got us into this mess with you when you leave.
Hey anon 12:58, "from each according to his ability, to each according to his needs" is kind of what you're thinking huh?
I happen to live in a relatively small community in the midwest in which a very large number of IT workers from India have moved in over the years. While I consider some of them friends, I will say that generally speaking, they seem not to have allegiance to any country, if they have an allegiance, it's to money. They seem to consider Lou Dobbs the anti-christ for his rants about illegal immigration, and those whom have become american citizens make it very clear that the only reason they did so was to make moving in-and-out of the country easier. Their politics are simple, they are for any politician who wants open borders. I admit I find this a tad disconcerting, but I think it's driven mostly by the hard lives they and their relatives had/have back in india. Not sure where this fits in with other comments, but to me they seem to be embracing a 'world government', maybe without realizing it. While I have considered the 'moving to a cheaper country' idea, i'm drawn more to the 'find a part-time gig that reduces what i need to draw from my retirement pile' idea.
Social Security should not be lumped in with Medicare, Medicaid, et al. as part of the "entitlement problem" unless you discount the value of the "full faith and credit" commitment of the U.S. government. This is because Social Security is fully funded for the foreseeable future by current taxation plus the multi-trillion "bonds in a drawer" (Al Gore's "lockbox") which have replaced all the excess payroll collections recorded over the years. Any government official who declares Social Security in danger is in effect implying a default on very real government debt, unlike other "entitlements" which are paid straight out of general funds. Unforthunately, given the state of our national balance sheet, perhaps such a default is not unimaginable.
The multiple wives comment is interesting. Does a woman with multiple ex husbands get the opportunity to receive SS from each husband?
i know the answer to that one.
no.
she can pick from different husbands, presumably where she would get the biggest payout.
Businessweek has a (very) short review of Faber's new book. It mentions that Faber is advocating a portfolio and a timing model based on a 10 month moving average.
The article linked above gives the rest of it; it basically spells out the portfolio. My first instinct, to make a spreadsheet and backtest it, is shot down by the fact that he uses a new ETN. Man ETNs make me nervous.
Enduring mediocre sex from, and maintaining house for, more than one slob ought to have some incremental reward but, once again, social security disappoints: Still one must suppose women feel some gratitude if only for not being forced into dumpster diving or even more barbaric forms of sati (suttee).
Kidding (on the square) aside, those who want to understand social security should not waste time with conservative sources since these are uniquely incapable of understanding either the logic or implementation of social support much less reporting or analyzing it accurately: Try the more balanced CBO analysis at http://tinyurl.com/ck2svw possibly preceded by the more progressive but highly detailed posts at http://tinyurl.com/dkx6e8 or, if you’re simply too busy, the very accessible graphical presentation at http://tinyurl.com/3ahbnz
Bon appétit.
The larger issue appears to be that working after retirement is probably not just a matter of economics. The research in that regard is becoming fairly compelling: A life purposively and actively lived tends to be longer as well as more interesting, provided of course that certain basic needs such as nutrition, housing and health-care access are met satisfactorily; cash flow above that surprisingly minimal level does not appear to be a critical factor.
As always, another delightful post by RW!
Great article by Hussman today.
http://hussmanfunds.com/wmc/wmc090420.htm
There is only 1 portfolio, the US government. The markets are in the hands of the government everything you learned about markets is out the window.
Study up on U.S.S.R era black markets and you will be best prepared for the future.
Hussman is incorrect. The current bounce is a result of braindead people funneling tax return money into 401K plans through financial advisors and such.
That 401K money will soon be stolen again by the end of the summer.
So, what it boils down to is when your government stops paying benefits to you, even though you have paid the premiums to get those benefits, for 50 years, and your guru braindead financial advosor/portfolio manager lost 50 percent of your account, you go back to work at 70 yrs old, so you can resume paying benefits premiums and the 3 percent fee to the braindead financial advisor/portfolio manager. Great solution Roger. Keep up the good work.
Roger, we will all have to work a little harder and longer in order to bailout the Madoff victims. Rest assured that the bailout for these people is coming in some form or another, hidden in a finance or tax bill that they will sneak through congress.
A retired friend of mine is extremely wealthy and boasts when he receives his SS check. Another friend is also retired and just about lives on SS alone. Somehow, I find this atrocious, if not unethical. Yes, there should be means testing. Right now, I'm paying for my friend that doesn't need any help.
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