The U.S. national debt is rising by $1 trillion about every 100 days

[iguanaman]

Everywhere. All the places you want to reduce spending, and all the places you don't want to reduce spending.

Speaking of slower growth.....any massive cuts in spending will cause a recession or worse. There is a better answer and it is tapping the "great wealth transfer". No one should inherit more than $100 million from their parents. Less than 50% of that transfer will pay off our debt and deficits for decades with no effect on GDP growth.

The biggest wave of wealth in history is about to pass from Baby Boomers over the next 20 years, and it’s going to have major impacts on many facets of life. Called The Great Wealth Transfer, $84 trillion is poised to move from older Americans to Gen X and millennials. If it’s managed smartly, Americans will be able to grow their wealth and ensure their financial security.

https://www.bankrate.com/investing/the-great-wealth-transfer/?tpt=b

 

[cpwill]

Correct. But your benefit doesn't change based on market returns, whereas your IRA holdings will be directly impacted by the markets.

Sort of. My benefits will be higher with my TSP / 401(K)s, but will be directly impacted by markets if I choose to make them so (I will agree it's wise to have a nice fat emergency fund at all ages, but particularly in retirement, not least for this reason). My pension will be lower than my returns from my TSP/401(k), and will be reduced if an all-too-common combination of mismanagement, poor long term planning by quarterly-focused actors, overpromising, and a drop in the market cause the pension to no longer be able to fund its (negotiated-by-actors-who-knew-they-would-not-be-around-to-be-held-responsible) payouts.

- At that point, you argued, it goes to the federal government. I countered that it can go to the federal government, who caps payout and does not include all benefits.

- Meaning that the already-smaller benefit that your spouse only gets half of, and that your kids get none of, and that you don't own, gets even smaller.

Market Volatility impacts the long term health of Pension plans just as it does the long term health of 401(k)s and IRAs; it's just that the latter are more securely yours, and you aren't going to be dragged down by others with them.

You mean, like what happens with 401(k) managers and offerings?

Sometimes. If your employer doesn't offer decent funds, then yeah, take the match and put the rest of your money elsewhere.

By the way, "mutual funds" are not the same thing as "pension funds."

No one I'm aware of has ever claimed they were?

That's part of the debate. But as discussed, ownership of those assets has its pros and cons. It is not a slam dunk for 401(k)s.

That's a huge part of the debate, man - it is what makes a 401(K) / IRA more stable and secure than a pension (which cuts your wife's income in half when you die) in addition to offering a better payout and in addition to being something that you can put to whatever purpose you please when you die.

Lord willing and nuclear war don't rise, my IRA's and TSP are going to support and benefit my family for at least three generations and will not only make me financially independent in retirement, but will help my children and my children's children retire in financial independence as well. I'm teaching my kids fiscal prudence now so they can do the same.

My pension, in comparison, is going give me a smaller benefit when I'm alive (and will not give me financial independence), cut my wife half off when I die, and give my kids nothing. And - because I don't own it, and that's important - I'm completely at the mercy of the decision-making of others on what happens to it. If we hit the entitlement crisis in the 2030s and part of the deal is "sorry folks, but, 50% haircut on federal pensions", welp, there's nothing I can do about it.

Absent someone coming up with a wealth tax or something similarly bizarre, however, my TSP and IRAs are fine. Because I own them.

And all 401(k)s, and IRAs, are not. How is "nothing" better than "something?"

They are all self-insured because you own them. They are yours. Unlike a pension, you are not dependent on others for their continued existence, and so, the risk that we will see the kind of pension fund failure in a 401(k) / IRA is nonexistent.

 

[cpwill]

And again... Whatever conditions tank a pension fund are highly likely to tank your 401(k).

Nope - because my 401(K) is not obligated to fixed outputs. I can let my 401(K) recover in a way that a pension fund will not have the chance to.

• You can't always recover.

True. We could see nuclear war, or its equivalent. If someone takes the grid down in the U.S., the vast majority of us will turn into bandits before dying of dehydration, starvation, violence, or disease.

But that kind of series of events isn't exactly going to distinguish between 401(K)s and Pensions. Conditions that would cause the U.S. economy to not recover are going to take out the less-flexible and weighed-down pension funds either concurrently or before they take down 401(k)s.

• Individuals generally suck at allocating their own assets.

You'll get no argument from me that we need to do a much better job of educating folks on this topic.

However, fund managers, who are running pension funds also suck at allocating assets.

Which is why I continue to point to the basic benefit of low-fee index funds.

Mind you, in a pension, it may not matter - you're probably paying that fee regardless of what you put it in

• 401(k)s are still subject to fees, taxes, and market downturns.

ROTH 401(k) and IRAs are not subject to taxes, you pay the fee's you want to, and (as described above) they are less vulnerable to market downturns than pension funds - which are more brittle - are.

• As already mentioned, pensions are guaranteed; 401(k)s and IRAs are not.

As pointed out, they are not. They offer the illusion of guarantee, but have, in fact, lower likelihood of supporting you well than 401(k)s and IRAs, most especially because you own the latter, and do not own the former.

GM screwed itself not because it has pension plans, but because they built s$#!y cars for years, and weren't prepared for the 2008 crisis.

LOL, no

...In its 2005 annual report, GM noted that for every active employee, it was supporting 3.2 retirees and surviving spouses. The company's health care bill, covering every U.S. employee, dependent, retiree and surviving spouse, totaled $5.3 billion....​

That's not a sustainable system.

One of the dangers of pensions is that they depend upon current conditions extending forever, whether it's the company, the workforce, demographics, etc.

Social Security wouldn't be in trouble if we had about 40 million more workers. But, that's not how history worked out.

As your blurb notes: GM didn't move new hires to 401(k)s out of the Goodness of their Corporate Heart. GM did it because it's cheaper for GM. That right there ought to tell you something.

Well, yeah: it tells me that, in addition to providing a better payout, taking better care of my wife, and being something I own and control instead of something that is owned and controlled by others, 401(k)s are more sustainable.

And if defined contribution plans are superior, then why aren't unions across the US demanding that employers abandon their defined benefit plans? Are all union leaders idiots?

Nope. They are following their incentive structure.

Which does not include worrying about what happens to these workers in 30 years, when conditions are markedly different than they are today.

Instead, you negotiate the biggest out-year-benefit you can, collect all the appropriate laurels and bonuses for doing so, and (like the management who agreed to the same thing) are safely retired and long gone when the bill comes due, and your successors get to find out whether or not they can pay for the promises you made. There's also a lot of nostalgia and muscle-memory built into our culture on this thing.

Pensions aren't bad. If you have access to a pension, you should take it. They just aren't as good.

 

[nvflash]

pay-as-you-go safety net.

It's not really a safety net, it is for some people, those who really need it, but most of the money is paid out to those who do not need it.

Seems to be a Constitutional issue, because everyone had to pay in, everyone has to get paid out if they ever file their claim.

It would likely take a Constitutional Amendment to make it a means tested safety net, and a redistributional program.

I don't have any problem with that, I would support it, the rich can afford to give back to those who's labors made them rich, and they will bitch but still be rich.

Let's be honest here, the Boomer generation holds most of the wealth in this country right now, and very few of them really need SS money, they just want it, and they get most of it.

Also to be honest, loaning the money back to Congress to spend and grow the nations economy was a good plan, the trouble is they spent it enriching outsourcing and making other nations very wealthy at the expense of our own.


Most of that was military expense, and sure it kept factories going in their states, but those factories build things that destroyed wealth, not created it.

The money would have been better spent on affordable housing in America, and other needful infrastructure, but it was not.

The rich got richer at the expense of the labor class, and now they are telling us the program can't pay even the little bit that goes to those who truly need it.

 

[cpwill]

Speaking of slower growth.....any massive cuts in spending will cause a recession or worse. There is a better answer and it is tapping the "great wealth transfer". No one should inherit more than $100 million from their parents. Less than 50% of that transfer will pay off our debt and deficits for decades with no effect on GDP growth.

The biggest wave of wealth in history is about to pass from Baby Boomers over the next 20 years, and it’s going to have major impacts on many facets of life. Called The Great Wealth Transfer, $84 trillion is poised to move from older Americans to Gen X and millennials. If it’s managed smartly, Americans will be able to grow their wealth and ensure their financial security.

https://www.bankrate.com/investing/the-great-wealth-transfer/?tpt=b

You can certainly try that, but, you aren't going to get the proceeds you are imagining, and you are going to have to push way - way - down into the middle class.

The super wealthy are going to have their money in trust funds or other devices designed explicitly to not get cut in half. What you can get is a lot more of "Mom and Dad owned their $300K house, and still had $200K in investments and savings".

Like the "Let's Just Tax Unrealized Wealth!" (which it has a lot of similarities with), the "Let's Just Tax All The Boomers When They Die!" idea can seem superficially attractive, but is likely to fail when attempted in the real world.

 

[cpwill]

Two words: Congressional pork

Okedoke.

Congressional Pork was $753.4 million in 2024. Less than 1 billion. Basically a rounding error for the fraud in Medicare.

So, let's get rid of all of it. Now we've solved ... ~0.05% of the problem. 99.95% left to go.

So... where are we getting the rest?

We can maybe get another .5-1% from "End Foreign Aid", though that might come with a lot of other negative externalities.

The easy solutions are long gone.


We are going to have to cut defense. We are going to have to cut expenditures in social security. We are going to have to cut expenditures in Medicare/Medicaid. We are going to have to raise taxes on upper income earners. We are going to have to raise taxes on middle income earners. We are probably going to have to raise taxes on lower income earners.


We are way past the point where we can avoid this by only doing stuff we like. We are now deeply in the area where the only way out is through pain - and every year we ignore it and add blithely add trillions more on top, the pain gets worse, and our ability to protect the poor through this becomes less.

 

[mrjurrs]

Also true! And the problem is that our debt and debt growth is (currently) going to far - far - outstrip our economic growth over the next few decades, until it produces a crisis.



1.6%. Oof Not Great, Bob.

And, given that debt acts as a drag on growth, it's gonna only get harder to recover from here


*also, a side note, and not part of this discussion, but I trust the CCP's numbers about as far as I can throw the Great Wall.



True. We should definitely be trying to boost growth by doing things like boosting domestic energy production, reducing our regulatory burden, freeing up our national infrastructure, etc.



Yeah, so, wealth taxes have only failed in every other country they've been tried.

If you can tell the future, what are you doing here?

Not great? So what? Show me the stats you do trust.

So what? Edison failed 10,000 times before he found the filament that worked. Please note, you know the future in your first sentence and claim history defines the future in your last.

 

[iguanaman]

You can certainly try that, but, you aren't going to get the proceeds you are imagining, and you are going to have to push way - way - down into the middle class.

The super wealthy are going to have their money in trust funds or other devices designed explicitly to not get cut in half. What you can get is a lot more of "Mom and Dad owned their $300K house, and still had $200K in investments and savings".

Like the "Let's Just Tax Unrealized Wealth!" (which it has a lot of similarities with), the "Let's Just Tax All The Boomers When They Die!" idea can seem superficially attractive, but is likely to fail when attempted in the real world.

Billionaires cannot hide their wealth if Govt. won't let them. They would have to give it all away. Simply taxing any inheritance (trust funds included) over $100 million will create trillions in revenue. That money mostly came from low taxation anyway and it needs to be returned to the Govt.

 

[cpwill]

Billionaires cannot hide their wealth if Govt. won't let them.

MAGIC!

We will simply (something something something something)!

They would have to give it all away

That's a fantastic way to preserve family wealth.

Simply taxing any inheritance (trust funds included)

Trust Funds aren't Inheritances

over $100 million will create trillions in revenue.

It will not

That money mostly came from low taxation anyway and it needs to be returned to the Govt.

It came mostly from innovation and production, and a hefty chunk was taken by the government at the time. It was never the "gift" of government.

 

[cpwill]

If you can tell the future, what are you doing here?

All of us can anticipate the future with some degree of accuracy. I know when I drop the ball that it's likely to hit the floor. I know when I strike my hands together in a particular fashion, that I can create a clapping sound. I can anticipate that the sun is going to rise tomorrow in the east relative to my current position on the earth, and that it is fairly likely that gravity will generally continue to function.

And, in this case, we know we are headed towards an entitlement-driven, emergency-expenditure-exacerbated debt crisis. Because math (see, for example, OP).

Not great? So what?

Well, when economic growth is slow, everything else gets much, much, much harder, especially extricating oneself from a debt crisis.

Show me the stats you do trust.

The debt load of the U.S. is growing at a quicker clip[url] in recent months, increasing about $1 trillion nearly every 100 days.... U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at nearly $34.4 billion, as of Wednesday. Bank of America investment strategist Michael Hartnett believes the 100-day pattern will remain intact with the move from $34 trillion to $35 trillion....

Moody’s Investors Service lowered its ratings outlook on the U.S. government to negative from stable in November due to the rising risks of the country’s fiscal strength. “In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues,” the agency said. “Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”

For those who think "Just Raise Taxes" is the solution:

View attachment 67495908

We have had tax rates a lot higher - and didn't collect anywhere close to the % of GDP we need.

the IMF, the CBO, the GAO, Obama Administration Secretary of Treasury Timothy Geithner, the right-leaning Institute for Policy Innovation, the left-leaning Brookings Institute, the Medicare Trustees, the CBO again...

Pretty much everyone who has looked at our numbers - right and left - agree that these programs are unsustainable, and we are going to have to reduce expenditures.

so on and so forth. This stuff isn't exactly hidden. Everyone who has ever looked into our nation's finances has come back screaming that we are in deep, deep, trouble, and need to make changes now.

We just don't like that, and it's easier to ignore the problem until later. So we do.

So what? Edison failed 10,000 times before he found the filament that worked

Cool. Let's not bet the country's fiscal survival on the 982nd try, then.

Please note, you know the future in your first sentence and claim history defines the future in your last.

Understanding history is a fantastic way to anticipate future results. When we dropped atomic bombs on Hiroshima and Nagasaki, and that was really bad for those areas. We should not, therefore, drop atomic bombs on New York in the hypothesis that - maybe - if we do this 10,000 times, it will eventually be really good for that area.

 

[eohrnberger]

@cpwill I most certainly agree with your statements in previous posts here.

• Well, when economic growth is slow, everything else gets much, much, much harder, especially extricating oneself from a debt crisis. (#410)
• And, in this case, we know we are headed towards an entitlement-driven, emergency-expenditure-exacerbated debt crisis. Because math (see, for example, OP). #410
• We just don't like that, and it's easier to ignore the problem until later. So we do. #410

Because some don't 'like' the financial reality, they make uninformed statements like:

• Raise taxes on corporations (from 21 to 28 percent), and the wealthy, as Biden proposed in his budget. #93
  (Without the realization of who really ends up paying that tax hike (hint: it isn't the evil corporations, it's their consumers - and who's that again?)
• Tax all income as income above a cap. Most people aren't CEOs making $1 a year. #86
• Raise taxes and lift the contribution ceiling. #2
  
  Both of which are little more than 'Rich need to pay their fair share', but, in reality:
  

  The U.S. Already Soaks the Rich​

  In 2021 the richest 1% paid 45.8% of income taxes, up from 33.2% in 2001.​

  https://www.wsj.com/articles/u-s-income-taxes-top-1-percent-irs-tax-foundation-joe-biden-fair-share-3394355b
  https://www.msn.com/en-us/money/taxes/opinion-the-us-already-soaks-the-rich/ar-BB1kLKl0 (non paywall)

The reality is that if you confiscated every dime from the 1%, you'd pay for the government perhaps a single quarter, and no more, so clearly not a realistic solution by any means.

Further:

Republicans and Democrats are both unwilling to address the problem, and we've tried higher tax rates:




It turns out, people are able to anticipate things, and alter behavior accordingly. So long as we are keeping our basic progressive structure, nominal revenues are driven primarily by growth (or lack thereof).

this reality directly conflicts with the posts before it.

I agree the only solution is to turbo-charge the US economy, and out grow the debt before it catches up to us all:

• We should definitely be trying to boost growth by doing things like boosting domestic energy production, reducing our regulatory burden, freeing up our national infrastructure, etc. #397

But I fear that with the present political environment (poisoned by the Dem's MSM propaganda smear machine), pushing sloganeering non-solutions such as 'Rich must pay their fair share' (already debunked above) into popularity, the hard fiscal realities are just doing to end up as "
Yep, all is well until Austerity Day." (#271).
<sigh>

 

[mrjurrs]

All of us can anticipate the future with some degree of accuracy. I know when I drop the ball that it's likely to hit the floor. I know when I strike my hands together in a particular fashion, that I can create a clapping sound. I can anticipate that the sun is going to rise tomorrow in the east relative to my current position on the earth, and that it is fairly likely that gravity will generally continue to function.

And, in this case, we know we are headed towards an entitlement-driven, emergency-expenditure-exacerbated debt crisis. Because math (see, for example, OP).



Well, when economic growth is slow, everything else gets much, much, much harder, especially extricating oneself from a debt crisis.








so on and so forth. This stuff isn't exactly hidden. Everyone who has ever looked into our nation's finances has come back screaming that we are in deep, deep, trouble, and need to make changes now.

We just don't like that, and it's easier to ignore the problem until later. So we do.



Cool. Let's not bet the country's fiscal survival on the 982nd try, then.




Understanding history is a fantastic way to anticipate future results. When we dropped atomic bombs on Hiroshima and Nagasaki, and that was really bad for those areas. We should not, therefore, drop atomic bombs on New York in the hypothesis that - maybe - if we do this 10,000 times, it will eventually be really good for that area.

blah blah blah

 

[eohrnberger]

blah blah blah

"I can't hear you!"

 

[aociswundumho]

The thing with social security is well its secure.

It's not secure. Congress may change the terms whenever it becomes politically expedient to do so.

 

[cpwill]

In Constant Dollars:

My Pension - which is taxed - ought to give me about ~$1530/month (before I pay income tax on it) in retirement. When I die, my wife only gets 50% of it, and when she dies, it goes away. If you apply the "4% Rule", this gives it a value of around $450,000 (you have to pay a penalty on withdrawals to get survivor benefits).​

​

My TSP - which, because it is in a ROTH, will not be taxed - ought to grow to about ~$680,000 (applying a 7% CAGR), which, at the 4% rule, ought to give me about ~$2,275/month. And, when I die, my wife gets 100% of it, and, when she dies, it gets divided amongst my kids​

@Visbek, because I like geeking on this stuff, I went back and ran a * very * rough simulation of what the above numbers would look like.

- Now, again, this is a 401(k) built up over half of my time working for that employer, v a pension that accumulated over the full time working for that employer.

If we assume a retirement age of 60, and that I live another 20 years, and my wife another 10 after that, that means these things have to support us over 30 years.

So, I figured, let's withdraw the standard 4% from the account every year, and stack that up against the Pension. I pulled SP 500 returns from here to track the growth (and occasional shrinkage!) of the TSP, and pulled inflation numbers from here to make the pension grow with inflation, for an apples-to-apples comparison, and backward-cast for 30 years of coverage, starting in 1993 and ending last year. After 20 years, I die, and my pension gets cut in half (that's the year that's highlighted orange).

It stacked up pretty well:



Overall, my TSP / 401(k) brought me and my wife $864,980.61 more in our retirement than we got from the pension, and there was not a single year where the TSP / 401(k) underperformed the pension (though it got closer in 2009, after the 2008 market crash, when the TSP / 401(k) only produced $2,131.05 more than the pension did).

And, of course, when she dies, my kids get $1.76 million

It's pretty easy to see how you can wiggle the years to produce a couple of years in which the 401(k) / TSP underperforms. If I changed retirement date to 2000, for example, and assume a 6.5% rate of return and 3% inflation rate for years 2025-2030 for my wife (which are both worse than likely: 6.5% is below average returns, and inflation for this year is looking like around 2.6%), the TSP underperforms the pension for most of the time I am alive**, and only really begins constantly outperforming the Pension for the rest of its existence after my I die. In that case, the 401(k) / TSP only outperformed the Pension by about $122K over our lifetimes, for an average of about $330 a month more. Not bad for a TSP that was built up over 10 years, versus a pension built up over 18.

And, of course, we are still left with just over $1 million to give to our kids. As opposed to the pension, which gives them... zero.

**And, of course, this can be ameliorated by having an emergency fund to draw on instead of your investments during a downturn, which, you really should do, or, if you feel like it, picking up a twilight job to cover the bills while you are still in the putter-around phase and the market recovers. My parents don't need money, but they did this anyway, working at a local theater because it lets them see all the shows, and gets them out of the house, while still allowing them flexibility to do what they want in retirement. ​

...Overall, even if we produced a worse-case scenario for the post-war period (retiring in the teeth of the dot-com bubble burst + 9/11, just before the 2008 market meltdown), the TSP / 401(k) option is still net superior.

Then consider what it would look like if we had a full 18 years of investments in the TSP, instead of merely 10 (bumping that 680K to about 830K), to make it a truly apples-to-apples comparison:




And in the retire-into-the-teeth-of-the-downturn scenario:

 

[Lord Tammerlain]

@Visbek, because I like geeking on this stuff, I went back and ran a * very * rough simulation of what the above numbers would look like.

- Now, again, this is a 401(k) built up over half of my time working for that employer, v a pension that accumulated over the full time working for that employer.

If we assume a retirement age of 60, and that I live another 20 years, and my wife another 10 after that, that means these things have to support us over 30 years.

So, I figured, let's withdraw the standard 4% from the account every year, and stack that up against the Pension. I pulled SP 500 returns from here to track the growth (and occasional shrinkage!) of the TSP, and pulled inflation numbers from here to make the pension grow with inflation, for an apples-to-apples comparison, and backward-cast for 30 years of coverage, starting in 1993 and ending last year. After 20 years, I die, and my pension gets cut in half (that's the year that's highlighted orange).

It stacked up pretty well:

View attachment 67537639

Overall, my TSP / 401(k) brought me and my wife $864,980.61 more in our retirement than we got from the pension, and there was not a single year where the TSP / 401(k) underperformed the pension (though it got closer in 2009, after the 2008 market crash, when the TSP / 401(k) only produced $2,131.05 more than the pension did).

And, of course, when she dies, my kids get $1.76 million

It's pretty easy to see how you can wiggle the years to produce a couple of years in which the 401(k) / TSP underperforms. If I changed retirement date to 2000, for example, and assume a 6.5% rate of return and 3% inflation rate for years 2025-2030 for my wife (which are both worse than likely: 6.5% is below average returns, and inflation for this year is looking like around 2.6%), the TSP underperforms the pension for most of the time I am alive**, and only really begins constantly outperforming the Pension for the rest of its existence after my I die. In that case, the 401(k) / TSP only outperformed the Pension by about $122K over our lifetimes, for an average of about $330 a month more. Not bad for a TSP that was built up over 10 years, versus a pension built up over 18.

And, of course, we are still left with just over $1 million to give to our kids. As opposed to the pension, which gives them... zero.

**And, of course, this can be ameliorated by having an emergency fund to draw on instead of your investments during a downturn, which, you really should do, or, if you feel like it, picking up a twilight job to cover the bills while you are still in the putter-around phase and the market recovers. My parents don't need money, but they did this anyway, working at a local theater because it lets them see all the shows, and gets them out of the house, while still allowing them flexibility to do what they want in retirement. ​

...Overall, even if we produced a worse-case scenario for the post-war period (retiring in the teeth of the dot-com bubble burst + 9/11, just before the 2008 market meltdown), the TSP / 401(k) option is still net superior.

Then consider what it would look like if we had a full 18 years of investments in the TSP, instead of merely 10 (bumping that 680K to about 830K), to make it a truly apples-to-apples comparison:

View attachment 67537649


And in the retire-into-the-teeth-of-the-downturn scenario:


View attachment 67537652

One question

Now since I have known you from another board, I believe I have a reasonable estimate of your age. ( early to mid 40s at the oldest

How would you have a 401k worth 830 000 in 1993 when I expect you still be in high school?

Starting off with 830 000 in your retirement account will heavily sku the individual benefit to self directed vs pension. Had you started both values at close to zero.

You also did not account for withdrawals from your 401k in retirement. At least based on what I saw. If you are using SS and your pension to cover living expenses while leaving the 401k untouched that again skus the ending conclusion.

 

[cpwill]

One question

Now since I have known you from another board, I believe I have a reasonable estimate of your age. ( early to mid 40s at the oldest

How would you have a 401k worth 830 000 in 1993 when I expect you still be in high school?

Ah - apologies if I was unclear: I needed 30 years of data to show how it such a fund would have performed in retirement v a pension fund, so, I grabbed the previous 30 years, and "back-cast".

In reality, you are correct about my age - but, one of the points @Visbek has been raising is Volatility. To simply say "Here is what the volatility will look like in the future" felt like a step too far .

You also did not account for withdrawals from your 401k in retirement.

It did indeed. The chart above withdraws 4% of the fund every year.

Take, for example the last chart:

2009 ($353,323.82) + (23.45% return) to​

2010 (418,731.12)​

​

$353,323.82 * 1.2345 = $436,178.26, which is > $418,731.12​

​

Looking at it again, I think the formula I typed in actually took out too much. That's what I get for doing it quickly, but, if I'm going to make errors, that's the right direction to err in (against my argument, so, it's not goosing the numbers, but over-steel-manning the other side).​

​

In reality, I plan on having about a years worth of expenses in an emergency fund, so I can ride out market downturns, but, didn't want to make another post to show how that would work out (to spend it and then later draw it back out again).

At least based on what I saw. If you are using SS and your pension to cover living expenses while leaving the 401k untouched that again skus the ending conclusion.

SS + a part-time twilight job + small pension to get a couple more years of pure growth also sounds smart. We will see how much I just want to totally drop out of the workforce when I get there .

 

[CaughtInThe]

Why are you so quite on this stuff??

 

[aociswundumho]

Why are you so quite on this stuff??

No matter which one wins they're both going to spend like sailors. The US is definitely going to experience hyperinflation, probably 15 to 20 years from now.

 

[cpwill]

Why are you so quite on this stuff??

Assuming you mean "quiet" - I'm not (you can check, you know). I've been a critic of Trump on the fiscal front since 2015, and my case only got stronger as he continued to prove me correct by refusing to address entitlements and spiking spending.

 

[Econ4every1]

In 2021 the richest 1% paid 45.8% of income taxes, up from 33.2% in 2001.

Not sure I see the issue? Not because I want to "stick it to the rich", but because it seems blatantly obvious to me that when we look at the numbers, there's no issue.

Those in the top 20% earn 55% of all income. The top 10% own 80% of all wealth.

The top 1% make 27% of all income and own 30% of the nations wealth.

When you consider the private sector combined has $171 trillion dollars in assets and the top 1% of that own 30% of that? That's $51 trillion divided between just over 2 million people, means the top 1% as a group average wealth is $25 million with some having a lot less and a few having much, much, much more.

Consider the top 0.1% own 13% of the nations wealth (that's $6.6 billion each).

Consider the Walton family has more wealth that the bottom 40% combined.

Now, if you could show that the wealth of this group was declining, you might have a point. But the top1% as a group find their share of wealth and income increasing despite the (my best sarcastic voice) MASSIVE TAX BURDEN, suffered by the top 1%.

Cry us all a river.

Now should the 1% pay more? Well, that's tricky. As someone who knows that the national debt isn't something that is, right now, a problem, trying to take wealth away from the top 1% under the auspices of repaying debt is a solution in search of a problem. A better reason for taxing the top 1% is that the accumulation of wealth when pooled in private equity firms is used to extract wealth from the economy without returning value.

For example, private equity firms are buying up the nations trailer parks in order to increase lot rents and decreasing services and amenities with the goal of raising rents to the point where people have to move. Of course the people that invest in these schemes understand that a large percentage of people don't have the $6k-$15k it takes to move a a mobile home and are forced to abandon them. Mobile homes are acquired as payment for unpaid rents. Those units are refurbished and rented. This is just one example of the danger of venture capital firms using their collective wealth to extract wealth (as opposed to earning it). Sort of like a parasite.

Door Dash and Uber are other firms funded by venture capital with the goal of changing the way a business is done by loosing money hand over fist until your competition is put out of business. Then, when the market is controlled pries are increased, salaries are decreased and service is the same if not worse.

I have no problem with people earning their money in legitimate business, however the accumulation of massive sums of capital seeking profit eventually results in the top few percent cannibalizing the bottom 90%.

That all said, the other solution is to make payments to the bottom 80% to decrease the gap. Or perhaps some of both, taxes and increased benefits to shrink the gap.

 

[eohrnberger]

Not sure I see the issue? Not because I want to "stick it to the rich", but because it seems blatantly obvious to me that when we look at the numbers, there's no issue.

Those in the top 20% earn 55% of all income. The top 10% own 80% of all wealth.

The top 1% make 27% of all income and own 30% of the nations wealth.

When you consider the private sector combined has $171 trillion dollars in assets and the top 1% of that own 30% of that? That's $51 trillion divided between just over 2 million people, means the top 1% as a group average wealth is $25 million with some having a lot less and a few having much, much, much more.

Consider the top 0.1% own 13% of the nations wealth (that's $6.6 billion each).

Consider the Walton family has more wealth that the bottom 40% combined.

Now, if you could show that the wealth of this group was declining, you might have a point. But the top1% as a group find their share of wealth and income increasing despite the (my best sarcastic voice) MASSIVE TAX BURDEN, suffered by the top 1%.

Cry us all a river.

Now should the 1% pay more? Well, that's tricky.

Not 'tricky' at all, given your statements above.

As someone who knows that the national debt isn't something that is, right now, a problem, trying to take wealth away from the top 1% under the auspices of repaying debt is a solution in search of a problem. A better reason for taxing the top 1% is that the accumulation of wealth when pooled in private equity firms is used to extract wealth from the economy without returning value.

For example, private equity firms are buying up the nations trailer parks in order to increase lot rents and decreasing services and amenities with the goal of raising rents to the point where people have to move. Of course the people that invest in these schemes understand that a large percentage of people don't have the $6k-$15k it takes to move a a mobile home and are forced to abandon them. Mobile homes are acquired as payment for unpaid rents. Those units are refurbished and rented. This is just one example of the danger of venture capital firms using their collective wealth to extract wealth (as opposed to earning it).

Sort of like a parasite.

The underlying implication is that the wealthy are parasites.

Tell me. How many in poverty can start a business and hire others? Given them the opportunity to earn a living?

Door Dash and Uber are other firms funded by venture capital with the goal of changing the way a business is done by loosing money hand over fist until your competition is put out of business. Then, when the market is controlled pries are increased, salaries are decreased and service is the same if not worse.

I have no problem with people earning their money in legitimate business, however the accumulation of massive sums of capital seeking profit eventually results in the top few percent cannibalizing the bottom 90%.

That all said, the other solution is to make payments to the bottom 80% to decrease the gap. Or perhaps some of both, taxes and increased benefits to shrink the gap.

Yes, yes, government confiscates what they deem as 'excessive wealth' and redistribute that wealth to those whom they deem as more deserving of it.
This nothing more than a scheme to sell a vastly more interceding government, interfering in people's lives, a vastly more powerful government (able to dictate which disfavored groups need punitive punishment) and which groups are more deserved of the fruits which someone else has worked for.

Yet another class envious 'wealth redistributioninst'.
Tell me, what justification can you offer to seize what someone else has worked for and earned? Just because they did well?

Based on your exceedingly long rant above, a sure bet that you support 'equity' (i.e. equal outcomes regardless merit and regardless of work ethic) over 'equality' (equality in opportunity).
DEI hires over merit.

All of this wealth redistribution is just crap.
People should be able to keep what they've earned, what they've worked for, and the government, to the largest extent possible, should just leave people alone.

Not just 'No', but 'Hell No'.

 

[Econ4every1]

The underlying implication is that the wealthy are parasites.

More like the acceleration of wealth into fewer and fewer hands leads to more opportunities for the ultra wealthy to use their money in a way that makes themselves money without any thought to the cost on society.

So no, "the wealthy" is a lot of people, but the people who are engaged in the immoral activities I talked about are wealthy.

Tell me. How many in poverty can start a business and hire others?

None, which is why increasing poverty and consolidation of wealth in the top 10% is a problem

Yes, yes, government confiscates what they deem as 'excessive wealth' and redistribute that wealth to those whom they deem as more deserving of it.

Nice strawman

Yet another class envious 'wealth redistributioninst'.

A nation of individualists in the way you are proposing cannot survive and would easily be conquered by its rivals and its resources and wealth stripped from it.

Tell me, what justification can you offer to seize what someone else has worked for and earned? Just because they did well?

To ensure the nation prospers, people have greater opportunity to meet their potential and to ensure that citizens are safe from those outside this nation that would take our freedom from us if they had the chance.

 

[Econ4every1]

Based on your exceedingly long rant above, a sure bet that you support 'equity' (i.e. equal outcomes regardless merit and regardless of work ethic) over 'equality' (equality in opportunity).

I do not think that means what you think it means.


Equity does not mean equal. Equity is considering peoples circumstances.

Equality means equal. Equality in opportunity means that everyone has the same regardless of circumstances. Of course we hope for equality at the finish, but that's just stupid.

This is equity:



This is equality:


The runners in the top pic are staggered because we know if they started equally, the inside runner would run a shorter path, it is equitable to stagger their starts and make the start unequal that way they win based on their own merit and not how the race was started.

The bottom photo is what it would look like if we embraced equality. In reality the race begins like this when the race is short. But if the race were several laps and runners had to stick to their lanes, the runner on the inside would have an advantage even though they had an equal start.


Now I don't believe in either true equity or equality.

I believe in what I would call reasonable minimums. I don't expect my children to have the same advantages as the children born into the nations wealthiest families. I accept they will have better opportunities, and that's fine. What I do expect in the US is for kids and adults to have the tools available to meet their potential so that they can , at the very least meet their potential and provide themselves and families a comfortable living without relying on the state and at best can become wealthy.

 

[Econ4every1]

DEI hires over merit.

This?

Diversity​

• Definition: Diversity refers to the presence of differences within a group. These differences can be in terms of race, ethnicity, gender, age, sexual orientation, physical abilities, religion, socioeconomic status, education, and more.
• Key Idea: It’s about representation—ensuring that different identities, perspectives, and experiences are included within an organization or community.
• Example: A company with employees from various racial backgrounds, genders, and cultures is considered diverse.

Equity​

• Definition: Equity involves creating fair opportunities and outcomes by addressing imbalances and systemic inequalities. It focuses on justice and ensures that individuals have access to the resources they need based on their unique circumstances.
• Key Idea: While equality gives everyone the same resources, equity gives people what they specifically need to succeed, acknowledging that some may start with disadvantages.
• Example: A company providing additional mentorship and development programs for employees from underrepresented groups is practicing equity.

Inclusion​

• Definition: Inclusion refers to fostering an environment where all individuals feel valued, respected, and supported. It’s about creating a sense of belonging, where everyone can fully participate and contribute.
• Key Idea: It’s not just about having diverse people in the room, but about making sure everyone’s voice is heard and valued.
• Example: A workplace where employees feel comfortable expressing their ideas, perspectives, and identities without fear of discrimination or exclusion is inclusive.

DEI in Practice​

• Diversity: Representation of a wide range of people.
• Equity: Fair treatment and support, based on individual needs.
• Inclusion: Creating a culture where everyone feels respected and valued.

Sorry, what's the problem with this idea in theory? I mean, the inclusion thing is a little touchy-feely I admit, but being respected isn't too much to ask, as far as valued, you should be valued equal to your value, no more no less.

I'll just say that all other things being equal (or reasonable so) no person should be chosen over another only to fill a race, gender or lifestyle requirement if they lack the skills necessary. That's stupid.

So if there are people out there abusing this concept to put unqualified individuals in places they don't belong, that's not what I support.

Let's take the recent SCOTUS pick. The President specifically chose a black woman. Do I have a problem with that? Absolutely not. there were no black women on the court and there are enough highly qualified black women to be considered.

Now, When we look at Trumps picks, we see three people that were all chose from a list created by the Federalist society. So if you aren't on that list, you're excluded, regardless of personal merit. In fact, Barrett is by far the least qualified person on the court and there are potentially thousands of more qualified judges that could have taken her place. So when you get all riled up about KBJ as a pick on the court, remember that the last three picks are far from the most qualified and we're picked from a list that excluded a lot of more qualified people.

All of this wealth redistribution is just crap.

We already have wealth redistribution. I gave you examples. The wealthy capture markets increase prices and don't deliver value, instead extracting additional wealth. That's wealth redistribution my friend. Just because it's happening in the private sector on not government doesn't mean it's not the same thing.

People should be able to keep what they've earned, what they've worked for, and the government, to the largest extent possible, should just leave people alone.

Any nation that operates like that is at best a third world nation, at worst is conquered by it's enemies and its people exploited and their freedoms lost.