Retirement Planning - Lessons Learned

[ultrarunner]

At one time I wanted the set... 2door, 4 for and Wagon...

I do have a factory Continental kit pulled from a parts car...

 

[Larry Caldwell]

Hey I was working $50 a week and still have my Rambler American... 1959

I was 13 and paying taxes, had a checking account and each week in summer of the $50 in wages $20 went to mom for room and board... and $20 in the bank.

Don't we all wish that world still existed? Unfortunately, the world we grew up in is gone, never to return.

 

[Larry Caldwell]

We must be kin...or should be! I also have a 1958 Rambler American. The 58,59,60 hard to tell apart. 195.6 cu in flathead six.

The 196 cast iron block had overhead valves by 1962. I know. I rebuilt one.

 

[Larry Caldwell]

Wonderful thing, America, you can believe as you wish. Facts, however, are a thing. The US has never experienced hyperinflation. What you are describing about the Nixon/Carter era was Stagflation. This was supposed to be impossible according to Keynes, who erroneously convinced generations of politicians that it was possible for government to spend its way out of recession.

Taxes are not really a factor in inflation as you describe the Great Society. Whether the government raises taxes or not, increasing the money supply is one way to spur inflation. Ultimately, it was Johnson's Great Society that led to the problems during the Nixon era...Nixon just made it worse by ignoring his economists, including Milton Friedman.

One reason the US has not experienced hyperinflation is that the minimum wage is not pegged to inflation. By definition, that would cause an ever expanding upward spiral in inflation. This is not really a debatable fact. It is exacting like an infinite loop in a computer program, if wages rise, then prices rise to pay them, then inflation indexes wages, which increase prices...ad infinitum.

For examples of hyperinflation, see modern day Venezuela, post WWI Germany, or post WWII Hungary.

That's a scary story, but I don't believe it. You obviously do. If you think having to pay more that $0.79 for a Big Mac will drive America into hyperinflation, I can't help you. You're trying to justify oppressing the most economically helpless class in American society. Here's a clue: inflation is not driven by the steadily increasing price of menial services.

 

[ultrarunner]

Don't we all wish that world still existed? Unfortunately, the world we grew up in is gone, never to return.

Somethings different for sure... back then a bank manager had authority...

I went in to cash my check and the teller called the manager over... he asked if this was my check and I said yes and then asked how long had I been working and I said one week on my summer job at the car dealership as gopher...

He approved cashing my check and gave me his card saying to see him to set up a checking account because anyone pulling down a weekly paycheck can open an account in his branch and that is how it started...

The funny thing is the world is gone because those in power deemed it so...

Now opening a checking requires ID and background check and I doubt any manager could or would approve on only a minors signature...

My brothers all worked... youngest at 16 lifeguard for park district and pre approved for credit card... and Savings and Loan manager approved it for $200 saying if my brother didn't pay the money would be coming out if his pocket... years have passed but brother still does business with Savings and Loan as Realtor...

 

[ultrarunner]

Maybe it is unique here in SF Bay Area but a lot of immigrants with nothing are sending kids to universities...

Lots of small business Asian and Spanish speaking in restaurant and trades...

At one time I was told 4% mortgage money of parents age would never happen as I signed papers for 13.5%

Wonder if Wonders... I currently have 2.75 fixed mortgage...

Never is relative...

 

[Fuddy1952]

The 196 cast iron block had overhead valves by 1962. I know. I rebuilt one.

Well, not exactly. There was an overlap of different engine choices. A 1964 American base 220 of mine still has the flathead.

 

[Torvy]

That's a scary story, but I don't believe it. You obviously do. If you think having to pay more that $0.79 for a Big Mac will drive America into hyperinflation, I can't help you. You're trying to justify oppressing the most economically helpless class in American society. Here's a clue: inflation is not driven by the steadily increasing price of menial services.

You are not understanding that the economy is connected. It is not just that worker or that burger. When the minimum goes up, people making more than the minimum will get more, too. Many union contracts are pegged to the minimum wage. They automatically get raises if the minimum goes up. They could already be make 2-3x the minimum, but the contracts move them up. Even in nonunion environments, if you want to keep your good employees happy, when the minimum goes up, so does everything else. You cannot claim moral high ground based on intentions. I am sure that you and many others truly believe that boosting minimum wages will benefit the poor. The data shows just the opposite. Sure, for a few weeks or months, those who keep their jobs will have a bit more.

It is super scary right now because we have money supply concerns on top of pressure for massive increases in the minimum.

 

[Gale Hawkins]

While a 5.9% SS check increase sounds good until I realized if everything I buy inflates the same I have lost ground in a major way. Inflation is a killer tax.

 

[Torvy]

While a 5.9% SS check increase sounds good until I realized if everything I buy inflates the same I have lost ground in a major way. Inflation is a killer tax.

Oddly enough, this becomes a good argument for not paying off your house/property even if you have the cash. ( Unless you have a high interest rate or worse, an adjustable rate. ) Your payment stays the same, but your income increases. The money not tied up in your property can make even more if invested carefully.

 

[Gale Hawkins]

Oddly enough, this becomes a good argument for not paying off your house/property even if you have the cash. ( Unless you have a high interest rate or worse, an adjustable rate. ) Your payment stays the same, but your income increases. The money not tied up in your property can make even more if invested carefully.

Not so much for this 70 year old guy.

 

[ultrarunner]

Oddly enough, this becomes a good argument for not paying off your house/property even if you have the cash. ( Unless you have a high interest rate or worse, an adjustable rate. ) Your payment stays the same, but your income increases. The money not tied up in your property can make even more if invested carefully.

The exact question I ponder at the moment...

4 years left at 4%... being debt free certainly attractive and 1/10 of a percent money market checking is where the proceeds I'm expecting would go if not to the mortgage???

 

[Torvy]

The exact question I ponder at the moment...

4 years left at 4%... being debt free certainly attractive and 1/10 of a percent money market checking is where the proceeds I'm expecting would go if not to the mortgage???

Money market will get better, but your goal should be to make 4%+ inflation or more. Otherwise, you would probably be better off paying it down. For comparison, the broad stock market gained over 10% over the past 50 years while annualized inflation was about 3.17% over the same period. So, net, your passive investment would gain almost 7% per year. Since that is greater than your 4%, your money would have been better off in the market. Ever situation is unique, though.

 

[Frankenkubota]

Way back there was actually a movie made, maybe late 70's. BBC did a series in the last couple years that was very popular. The Brit's are way into Watership Down. Great video!

yup

i think i've seen them all.

 

[Frankenkubota]

NEWS FLASH: Inflation is essentially the cost of perpetual growth on a finite planet. Growth WILL lead us to and over the edge. No matter how efficient we are, how "hard working" we are, how "inventive" we are, as long as we push growth (which is what gets most of us "retirement" funds- pensions, "returns" etc.) we are pushing toward hyperinflation (the breaking point).

As "savvy" as so many "economists" might be, they're operating on top of a false premise (perpetual growth on a finite planet is possible).

So, there is NO "solution" as long as there's growth. One's position on how to shuffle the deck chairs mostly only identifies one's sense of empathy...

you said it...without growth and the associated consumption, this house of cards falls

need to keep producing customers

 

[ultrarunner]

Money market will get better, but your goal should be to make 4%+ inflation or more. Otherwise, you would probably be better off paying it down. For comparison, the broad stock market gained over 10% over the past 50 years while annualized inflation was about 3.17% over the same period. So, net, your passive investment would gain almost 7% per year. Since that is greater than your 4%, your money would have been better off in the market. Ever situation is unique, though.

Thank you for posting…

As a family we are stock market adverse and always so which probably explains a lot…

 

[KennyG]

Traditional economic thought was that the money supply needed to expand enough to account for the increase in population and the increase in efficiency in production of goods and services (GDP expansion). Therefore, a certain amount of deficit spending was OK and a low level of inflation was inevitable. This seemed to be working well from the mid 1980s on.

However, there is a new (convenient) theory called Modern Monetary Theory. This proposes that governments can print any amount of money to finance deficit spending for anything they want. We are seeing this played out through the COVID stimulus programs which I believe were a very misguided attempt to crank up the economy without figuring out how the means of production would be available to meet demand. We are now seeing the inflation that traditional economic theory would say is inevitable.

Is it temporary or have we unleashed long term inflation? Who knows. But I think the stock market is much more likely keep pace with the inflation than fixed rate investments, based on the makeup and behavior of the Federal Reserve Board and our current administration.

 

[MossRoad]

Don't we all wish that world still existed? Unfortunately, the world we grew up in is gone, never to return.

No. I don't want to go back to the 60s.

 

[newbury]

While a 5.9% SS check increase sounds good until I realized if everything I buy inflates the same I have lost ground in a major way. Inflation is a killer tax.

I'm expecting inflation to pop 10% or more if the $15/hr minimum wage starts to take hold.
For those of us retired without a guaranteed cost of living increases it's devastating.
It's one thing to have a $15/hr minimum wage where the cost of living is high, quite another in poorer areas.
I live part time in Fairfax county Va and part time in Mississisippi. The average income in Fairfax is about $54K/yr, in my neck of the woods in Ms. its about $21K.

 

[DieselBound]

So you want economists to dive into a false premise and agree with it?

That will happen about when you admit you don't understand how economics works. Econ is apolitical. Politicians try to twist it to their advantage, but the laws of Econ are as solid as the laws of Physics. Repeatable and undeniable.

Economic Growth is not dependent on population growth. It helps, but is not necessary. You also run under the illusion that humans remain tethered to this planet. By the time population gets too high, we will either have moved on or experienced an externality like a lethal pandemic, asteroid strike or increase in solar output. As it is population growth has slowed considerably. Most of the growth is in the 3rd world. Humans have a funny way of adapting to change.

US oil policy would be a political discussion. Facts of how policies affect inflation is an economic discussion. This is not about party or politicians.

"So you want economists to dive into a false premise and agree with it?"

What are you asking here?

It's a MATHEMATICAL FACT that the planet is finite. Economists are NOT scientists (who understand the REAL world). Economics is ALL about politics. It's a human-framed (go ahead and point out where "economics" occurs naturally, in nature) construct. Human associations and constructs are political.

From https://en.wikipedia.org/wiki/Politics:

Politics is the set of activities that are associated with making decisions in groups, or other forms of power relations between individuals, such as the distribution of resources or status.

BTW - YOU jumped on the "population" topic. I did NOT. My context was RESOURCE consumption: fact is that the "1st world" consumes far more resources on a per-capita basis than does the "3rd world."