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Baby Boomers Are Retiring - And It's Going to Have a Huge Impact on the Economy

Jimster

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Dagger1 said: "You are in essence saying that folks who had two (or more) careers, one in which SS payments were made, one where payments were made into a public pension, should receive two fully vested retirement funds and therefore two full payouts. But that the person who had two (or more) careers both of which paid into SS, should only get one fully vested retirement fund (SS), much less than the first person. The person who had two separate jobs/careers and paid into SS for both of them only gets one SS check, not two checks (one SS, one pension) like the government worker who gets payouts from both retirement plans.
Everyone who paid into SS should get their promised benefit."

What I am saying is if you decided to get a pension and became vested, you should get that pension. If you paid into SS, you should get the appropriate amount of money consistent with the number of quarters paid in. They should not get less because they worked for a pension too. Yes, that would mean two checks but it also means that both checks came from their contributions. As it stands now, a person who has a vested public pension, is penalized for his service and foresight. Yes, that probably saves the government money but at the expense of the retiree. Incidently, prior to the Windfall Exclusion Act, it was perfectly acceptable to collect a full pension and your full SS benefit. While I am hurt, the military and public workers are probably hurt more.

Furthermore, it is not a case of getting something you didn't pay for or didn't deserve. The retiree played by the rules, did what was required including paying into the systems. He/she just doesn't get full benefits.
 

isisdave

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Jimster -- I don't think you have the math right on the charitable deduction thing, either.

If he gets $400k and donates it all, his tax result should not change. His AGI will go up $400k but his itemized deductions will too, leaving the taxable amount the same. It's possible that raising the AGI would decrease deductibility of some things and increase AMT liability, so the deduction might not cover all of the salary. It's also possible (not for Donald but for others) that the 50% charitable deduction limitation could reduce the effect of the contribution.

He could accept the salary and make the contribution from an IRA as part of his RMD, which would ensure that the whole went untaxed, I believe.

Also, on the WEP: this is explained well on the IRS site. The full explanation is too long for this thread. Basically, low earners get a higher percentage of their salary as a SS benefit ... remember, the purpose of SS is to prevent poverty... and WEP reduces the inflated benefit because you weren't really a low earner. But it only affects the first "band" of benefits, so you can only lose about $750 a month at most. If you have 20 years of "significant" earnings from an SS job (about $20k annually in recent years), you won't lose anything at all. Have you actually started getting SS benefits yet?

My teacher sister-in-law complained about this for years until I showed her how it worked.
 

WinniWoman

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And the one that really gets me is shown in this example:

I worked all my life, had one child, and I will get SS benefits based on my earnings. Fair enough.

Another woman did not work. She chose to stay home to raise her one child because her husband made plenty of money for them to live on. When THAT woman turns 66, she can collect half of her husband's SS, which- because he was a high earner- is substantial. Yes- me- who worked her whole life- will get less than the woman who stayed home all her life. And-providing her husband is still alive and also taking the max SS based on his high earnings, they will be racking in the money.

Why should that woman be entitled to anything? If her husband was deceased, I certainly agree she should get his Social Security. But not when he is alive and already collecting his!
 

WinniWoman

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And don't get me started on the zillions of people on Disability SS Income that are no more disabled than I am.:mad:
 

geekette

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Our investment strategies tend to evolve over the years. I don't disagree with much you've said. The one exception is that 'people are not forced to sell'. Let me give you an example. My mom passed away several years ago after an unexpected illness that lasted for about 3 years. She stayed in her home, as she wanted, but needed around the clock care. She was very healthy and active prior to this; she could not have anticipated this. My mom was fairly well off from a financial perspective. She had a pension and substantial savings. We were 'forced' to sell most of her securities because she wanted to stay in her home rather than going into a nursing home. We used most of her savings to honor her wishes. In a sense, was fortunate that this happened during a rising market. Mom would not have been able to afford this care had the timing of her illness been after the latest market crash.
health care is a different matter, covered different ways, but I do get paid divs most business days of the year so the cash keeps coming, even after LTC, even after depleting my HSAs. Right up until I sell the shares as that dries up the income.

This is frankly still not a forced to sell situation, that was a choice in order to do what she wanted. That's not force, that's "sell my stocks and keep me home!" No one is forced to sell stocks, it is always a choice. I agree that timing of that choice can matter. Life can be inconvenient, no doubt about it. hard to call illness timing lucky, I get it, but it was, financially.

Given that I have saved in order to float my elderly self, selling stocks to live somewhere special would be part of the plan, if desired. What else would the money be for? Needs in old age is exactly why I've done this, money brings options. No one knows how they will age, how long they can care for themselves. All the better to have assets aplenty to accomplish happiness through creature comforts. Smart cookie that your mom did have the assets, could be where she wanted to be. I think that's all any of us can hope for, to live out our days as we desire.
 

lizap

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health care is a different matter, covered different ways, but I do get paid divs most business days of the year so the cash keeps coming, even after LTC, even after depleting my HSAs. Right up until I sell the shares as that dries up the income.

This is frankly still not a forced to sell situation, that was a choice in order to do what she wanted. That's not force, that's "sell my stocks and keep me home!" No one is forced to sell stocks, it is always a choice. I agree that timing of that choice can matter. Life can be inconvenient, no doubt about it. hard to call illness timing lucky, I get it, but it was, financially.

Given that I have saved in order to float my elderly self, selling stocks to live somewhere special would be part of the plan, if desired. What else would the money be for? Needs in old age is exactly why I've done this, money brings options. No one knows how they will age, how long they can care for themselves. All the better to have assets aplenty to accomplish happiness through creature comforts. Smart cookie that your mom did have the assets, could be where she wanted to be. I think that's all any of us can hope for, to live out our days as we desire.

We are going to have to 'agree to disagree' on the 'forced to sell' issue.. There are many situations that may force a person to sell his/her securities, especially in our later years. This was just one example. Age has taught me to expect the best, plan for the worst, and expect to be surprised. I wish you the best and hope all your retirement plans come to fruition.
 
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Jimster

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Jimster -- I don't think you have the math right on the charitable deduction thing, either.

If he gets $400k and donates it all, his tax result should not change. His AGI will go up $400k but his itemized deductions will too, leaving the taxable amount the same. It's possible that raising the AGI would decrease deductibility of some things and increase AMT liability, so the deduction might not cover all of the salary. It's also possible (not for Donald but for others) that the 50% charitable deduction limitation could reduce the effect of the contribution.

He could accept the salary and make the contribution from an IRA as part of his RMD, which would ensure that the whole went untaxed, I believe.

Also, on the WEP: this is explained well on the IRS site. The full explanation is too long for this thread. Basically, low earners get a higher percentage of their salary as a SS benefit ... remember, the purpose of SS is to prevent poverty... and WEP reduces the inflated benefit because you weren't really a low earner. But it only affects the first "band" of benefits, so you can only lose about $750 a month at most. If you have 20 years of "significant" earnings from an SS job (about $20k annually in recent years), you won't lose anything at all. Have you actually started getting SS benefits yet?

My teacher sister-in-law complained about this for years until I showed her how it worked.
Yes i have been collecting ss benefits for years and losing about $700 per month. I have 18 significant years but will not pursue the remainder unless i get a big case or two. As for the number of quarters, 150+ used to get FULL benefits BENEFITS the WEP. At that time there was no such thing as a significant year. My total contribution was substantial because once you reach the threshold of a signicant year nothing else matters for that year except for the contribution limits.
Also what constitutes a signicant year keeps increasing. At 1 point it was barely 1k. I believe it is more like 25k. I must have at least 10 more years very close to the theshold.

[Political comment removed.]
 
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dagger1

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Dagger1 said: "You are in essence saying that folks who had two (or more) careers, one in which SS payments were made, one where payments were made into a public pension, should receive two fully vested retirement funds and therefore two full payouts. But that the person who had two (or more) careers both of which paid into SS, should only get one fully vested retirement fund (SS), much less than the first person. The person who had two separate jobs/careers and paid into SS for both of them only gets one SS check, not two checks (one SS, one pension) like the government worker who gets payouts from both retirement plans.
Everyone who paid into SS should get their promised benefit."

What I am saying is if you decided to get a pension and became vested, you should get that pension. If you paid into SS, you should get the appropriate amount of money consistent with the number of quarters paid in. They should not get less because they worked for a pension too. Yes, that would mean two checks but it also means that both checks came from their contributions. As it stands now, a person who has a vested public pension, is penalized for his service and foresight. Yes, that probably saves the government money but at the expense of the retiree. Incidently, prior to the Windfall Exclusion Act, it was perfectly acceptable to collect a full pension and your full SS benefit. While I am hurt, the military and public workers are probably hurt more.

Furthermore, it is not a case of getting something you didn't pay for or didn't deserve. The retiree played by the rules, did what was required including paying into the systems. He/she just doesn't get full benefits.
Folks who are in the private sector and work for a company which offers a pension and requires SS payments get both upon retirement. But folks who as government workers earn a pension (their first career) do not pay SS while earning this pension. Government pension plans are authorized replacements for SS. If government workers earned their government pension and paid SS at the same time, and then took a second career paying only SS, they should get both full pension and full SS benefits. But because they do not pay SS while working for governments/municipalities, their pension payments take the place of SS payments. Government pension payments are basically substitute SS payments.
 

geekette

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We are going to have to 'agree to disagree' on the 'forced to sell' issue.. There are many situations that may force a person to sell his/her securities, especially in our later years. This was just one example. Age has taught me to expect the best, plan for the worst, and expect to be surprised. I wish you the best and hope all your retirement plans come to fruition.
I wish you the best as well, all of us, actually, as all of us are at risk of unknown Stuff. That's why my plan also has evolved over time.

Yeah, agree to disagree! I fathom zero possibility of gun to the head sale of stock just as no one forced me to click Buy. it's semantics, that's all. For me, everything I do is a choice because there is always another option, such as doing nothing. I've lived lean in order to not have to live lean in retirement. A Choice, vs new cars all the time or flight to Europe every summer. Each of us has our own priorities and preferences, that's what makes the world interesting.

I'm within 8 years of retirement, it is fine-tuning time for me, shrinking expenses as far as they will go, hammering away at mtg. Income vs outgo is key for me, not portfolio value. I will be able to project my income with reasonable certainty while those doing the 3-4% market value distribution are left to guesswork on forward years as market gyrates. That is the purpose of asset class diversification, cover your butt in down market. That's why I don't need it, my butt has coverage.

I have appreciated the back and forth as it is always good to have someone poke a hole so I have to think it through from a different angle. Valuable exercise. I admit to living an experiment, but others have succeeded at it and signs over 2 + decades show that I will, too. Maybe not, but I'll be fine no matter what. I always have been, with or without money.
 
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