[PrestonSturges]

We keep pouring money into the banks, and they "lose" the money and we have to bail them out or they loan us the government money and we have to pay interest and taxes. But in the end the money goes into offshore accounts or the pockets of wealthy people.

....who can turn right around and buy up public properties from municipalities who are mysteriously impoverished.

If we want to increase the money supply, send that money into the pension system where retirees will spend that cash on essentials instead of sending it to offshore tax havens.

[yellowcanoe]

$this->bbcode_second_pass_quote('ROCKMAN', 'y')ellowcanoe – Good point about the boomers getting their act together. OTOH consider that while there were some ups and down during the last 30 or so years the next few decades might not be as manageable as we had it. Being ill prepared is one thing. Running head long into a brick wall is another. But combine the two? That may get really ugly.

[vision-master]

$this->bbcode_second_pass_quote('', 'T')hat may be true, but there is no sure fire way to identify which stocks would do that. If keeping pension plans solvent is difficult now, it is going to become near impossible once we pass peak oil and our economy starts to shrink.

[KaiserJeep]

The problem with pensions and benefits - or entitlements if you prefer - is inflation.

The Federal Government tweeks the algorithim used to calculate the Consumer Price Index every year, in order to keep the figure low. They do this because there are so many disbursements of all kinds which are indexed to the CPI.

You can argue all day about what the true rate of inflation is. Here is an analysis that simply takes the algorithim used in 1980 and applies it unchanged to the years after 1980:



It is pretty much true that you have to earn 10% return and not collect any benefits from your nest egg to avoid shrinking it. I believe these figures, they jive with my personal experience over the last 50 years, since I first noted that $0.05 candy bars now were smaller and cost $0.10 each.

It is of course possible to earn much more than 10% return on capital. But you don't do so by retiring and letting somebody else manage your money. You earn such returns by staying in the game and working your buns off.

[radon1]

$this->bbcode_second_pass_quote('Quinny', '
')Why not lower retirement age and employ the unemployed youth?

[PrestonSturges]

$this->bbcode_second_pass_quote('vision-master', '')$this->bbcode_second_pass_quote('', 'T')hat may be true, but there is no sure fire way to identify which stocks would do that. If keeping pension plans solvent is difficult now, it is going to become near impossible once we pass peak oil and our economy starts to shrink.

[Paulo1]

Hey ho,
re: pensions and secure employment

A couple of days ago I heard a lady interviewed on CBC trying to get the official age of adulthood raised to 25, because (in her words..)the young were unable to become adults until that age and that she could not get her 24 year old off the couch where he spent his days playing video games.

I thought to myself, "who is the parent, here"? I found the entire idea offensive. My other thoughts are too foul to write down.

When my son (now 29), graduated high school 11 years ago, I gave him a few options. He could work and pay room and board to live at home for a year or so until he got on his feet, he could go to trade school for a pre-apprenticeship course and live at home for free and I would pay the tuition and books requiring him to move out and take on a formal apprenticeship after completion, or he could take on a practical university degree (engineering?) of which I would pay 1/3; he would have to work and pay for what he could, and then borrow what was required if he fell short. Poor grades?, then the bank of Dad would close down. If he didn't work he would have to move out upon graduation. Due to my interest in energy and PO I discussed with him that all energy could be transformed into electrical current and suggested he go on to become an industrial electrician in the energy field. He did so and has not looked back earning quite a bit more than I ever did in my careers.

My daughter has her own career and is doing just fine with a family and home of her own.

My point is this. Modern youth need to plan/prepare and not assume a safe pensioned career path is possible. Parents need to help them with this planning and encourage them to be realistic and focused. Encourage is the key word here. Having said this, such a thing is impossible if parents are themselves unwilling to take responsibility for their own success. I can remember my Dad telling me 45 years ago that "no one owes you a living", and that I had better remember that.

I have a very modest pension and retired at 57. Our pension plan was taken back from Govt. control back in the 70s because they (the Provincial Govt.) had a habit of using the accrued funds to finance infrastructure projects paying a very poor return for absconding with the Plan's savings and investments. I also paid in $1,000 per month into same pension, for 17 years. I was able to retire simply because I reduced all debt and often worked year round including many holidays for extra cash to pay down my mortgage and buy tools. We also sold out our home in town and moved to a poorer rural area and used the extra funds to buy land. I have told my wife not to plan on having a pension for the rest of our lives due to the shenanigans of the world financial system(s), and not count on anything or anyone if things go south. Meanwhile, we live each day to its fullest and live well with much family involvement and many fun times. (This does not include tropical vacations, golf memberships, or new cars).

I know it is tough out there these days, but not any harder than it was when my wages were frozen and my first mortgage interest rate shot up to 18% in 1980. No sooner than that happened I was laid off and had to work away from home in 3 month stretches....piece work pay for bush flying. Security? hhah. What is that? I remember my job steward (Teamsters) clapping me on the back saying I was one in a million, because in 1981 there were 1 million out of work and unemployed in Canada. We got through it and had a hell of a lot of fun along the way. You have to live for today and plan for tomorrow at the same time. That is the only real pension there is.

regards....Paulo

[Newfie]

Nice post Paulo1.

[Newfie]

I like this thread. Interesting comments.

I think that this issue is deeply related to the whole mess we have gotten the world into.

Assuming, for the moment that we could continue the world with the amount of production we currently have ( bad assumption, but for sake of argument I'll use it) then we probably have enough food and total wealth for everyone on Earth. The problem isn't production, or who is doing it, but one of distribution. Not only do we have the 1%ers, but frankly we waste horrendous quantities of food and energy. Some us us would have to sacrifice a bit,but we would all have enough.

So if we have enough ( through some form of equitable sharing) with current levels of production then why are we arguing over who within the society is doing the production? There are those of us who would gladly retire, self included. But there are those of us deeply want to work more and more, my Wife. For me, continuing to work is a hardship. For my Wife not working is a hardship.

But we are a pretty rigid society with set views of right and wrong and morality. We love to judge one another, harshly. This keeps us from finding relatively easy solutions to this pretty silly problem. Still, understanding the dynamics is an interesting exercise in human nature.

But like other pressing issues before us we will muck this up too.

[WildRose]

Pops mentioned the multi-generational homes of the past. I really think we'll see much more of this as time goes on. It can certainly be beneficial for all involved, if there is enough space in the home. The young ones look after the elders, and the elders can babysit the grandkids, help with gardening, cooking, etc. Right now, this type of arrangement still seems popular with families from India and Asia, for example. I think once we got into the 70's and 80's and women moved into the workforce full-time in large numbers, it became the norm to have a house for each family and then, larger and larger homes for even 3 or 4 people. Maybe our kids will realize they don't want to be slaves to their work for large homes filled in every nook and cranny with all matter of stuff from Ikea and Pier Imports. They may be more inclined to have a brother or sister renting a room or a smaller family unit living in a downstairs suite. That would certainly be more affordable for everyone.

[Lore]

There is no doubt we're going to return, at some point, to smaller communities eventually devolving into nothing more than nomadic groups of extended families, but don't expect it to look like the Walton's.

[WildRose]

$this->bbcode_second_pass_quote('Lore', 'T')here is no doubt we're going to return, at some point, to smaller communities eventually devolving into nothing more than nomadic groups of extended families, but don't expect it to look like the Walton's.

[Shaved Monkey]

How do state pensions work in your country?
In Australia a single aged pensioner(someone over 65 years old today) gets $827.10 a fortnight and free medical until the day you die.
a couple gets $1,246.80 a fortnight.

in Australian $s

[John_A]

$this->bbcode_second_pass_quote('vision-master', '')$this->bbcode_second_pass_quote('', 'I')magine what people said about the upcoming baby boomer generation in the late 60's. You had the hippy movement, anti-war protesting, the sexual revolution and drugs. Seems that generation eventually decided to put on a suit and tie and go to work!

[Pops]

Monkey, in the US full retirement is 65 but the age is increasing as time goes by - I'm 57 and my retirement age is 66 years & 6 months according to this. Retirement can be taken as young as 62 with reduced benefits and it can also be delayed until 70 with a slight increase in benefit.

Benefits are based on income from a person's 10 highest earning years. We call the payments Payroll Tax and they are around 15% of income up to around $100k. The employer pays half and the employee pays half (self-employed pay 100% themselves). Everyone pays payroll tax no matter their income but there is a cutoff at around $100k (and no corresponding "means testing" of benefits) making it one of our most regressive taxes.

I think the average check is around $1,200 a month. Again the amount is based on how much you earned (past tense) rather than how much you are earning (as a retiree). Thus it is more a savings account than an "entitlement" and comes close to being self-sustaining.

Medical benefits start at 65. Medical retirement coverage, unlike retirement, is in no way self supporting through the 3% payroll taxe and is a huge drain on the government.

All the above is a dramatic oversimplification. There are pitfalls galore, so much so there are long running columns by experts who regularly answer questions about benefits and rules. One of the things the Puritans impressed upon American is that no charity should be given without a healthy dose of judgement, recrimination and scorn. Social Security retirement is seen by many here as charity (on reason why it's referred to as an "entitlement" even though it's paid for by taxes) and one of the ways we punish the beggar is to make him jump through hoops of red tape and regulation.

That's just my opinion tho...

[wildbourgman]

It looks like the social security Ponzi scheme is going to need another major bipartisan fix at some point. When both parties firgure out the gig is up they'll work together and that's when you'll know how bad it is. The democrats will agree to draconian cuts and changes in the system for retirees and the republicans will agree to revenue (tax) increases. When you see this you know they are both scared of political ramifications of doing nothing.

I would expect chained CPI for certain, means testing, tax hikes, benefits reductions and a raising of the retirement age for future retirees.

[Pops]

Retirement just needs tweaks, health benefits the health system needs a major overhaul.

[vision-master]

$this->bbcode_second_pass_quote('wildbourgman', 'I')t looks like the social security Ponzi scheme is going to need another major bipartisan fix at some point. When both parties firgure out the gig is up they'll work together and that's when you'll know how bad it is. The democrats will agree to draconian cuts and changes in the system for retirees and the republicans will agree to revenue (tax) increases. When you see this you know they are both scared of political ramifications of doing nothing.

I would expect chained CPI for certain, means testing, tax hikes, benefits reductions and a raising of the retirement age for future retirees.

[wildbourgman]

$this->bbcode_second_pass_quote('', '7')8 million Boomer's - your so called ponzi scheme will play out intact for us

[vision-master]

Wages for J6P have been broken - even worse.......

Health care has been broken for j6P - even worse.......