The Big Financial Retirement Mistake You Should Avoid – Retirement Healthcare Costs

Did you know the majority of Americans grade themselves as having a ?C? based on their readiness for retirement, according to Worse, few have any concept of retirement healthcare costs.

What grade would you give yourself?

If you?re like the 54% of workers who said that they don?t have a clue on how much they should save for retirement, then go ahead and give yourself a ?C? too. More times than not, people who don?t know how much they should have saved up, don?t have enough saved up to stay on track for retirement at 65.

The Big Financial Retirement Mistake You Should Avoid - Retirement Healthcare Costs
The Big Financial Retirement Mistake You Should Avoid – Retirement Healthcare Costs

The biggest financial retirement mistake being made by the majority of Americans today is not having enough savings for retirement. The reason for this is that they simply don?t know how much they should have put away for retirement healthcare costs in retirement.

(Editor’s note: Probably the most over-looked area of retirement planning is preparing for retirement healthcare costs. I know little about it, and when Danielle approached me with an article on the topic, I jumped at the chance to get an expert opinion on the subject. There’s much more to preparing for retirement than just building up the biggest investment portfolio possible. Retirement healthcare costs are equally important. It’s worth investigating the possibilities and costs even if you’re years away from retirement. – Kevin)

The Big Picture – Get Your Savings and Investments in Order

Experts say that the average married couple should have about $280,000 minimum set aside for healthcare costs alone. However, one out of every three baby boomers that Northwestern Mutual surveyed admitted to having between $0 and $25,000 total in savings for retirement.

According to the, 38% of workers claim to have less than $10,000 put away for retirement. Neither of these groups of people is adequately prepared for retirement costs.

Many people claim the reason they aren?t prepared as well as experts say they should be is that they simply didn?t know how expensive healthcare would be in retirement.

How to Avoid this Common Mistake by Getting Professional Help

Avoiding this mistake is crucial if you want to be able to enjoy a worry-free retirement. To do that, there are a few steps you?ll need to take to ensure you are prepared for retiring on time.

The first step you should take is hiring a financial planner. A financial planner can help you figure out how much savings you will need to live a comfortable retirement.

One thing you should highly consider discussing with your financial planner is your health. Your health status can greatly affect your monthly spending, so you?ll want to have extra money set aside if you have specific health conditions that require more care.

The next thing you?ll want to prepare for is the possibility of? becoming unemployed sooner than planned. There is a possibility that as you age, you may find job opportunities are less abundant than they were when you were younger. You also never know when a layoff may occur so you can?t count on continued employment. You should be prepared for this possibility by having savings that can replace your monthly income if the unexpected occurs.

Finally, if possible, you?ll want to set up a health savings account (HSA). An HSA is a savings account that you can contribute money into tax-free to save for future healthcare expenses.

This account helps to pay for qualified medical expenses for you and your immediate family members. When you reach retirement, you can use that savings to pay for Medicare premiums as well as doctor copays, prescription copays, and even dental, vision and hearing expenses, which Medicare doesn?t? cover. This makes the HSA a great vehicle for saving for retirement.

Covering the Gaps in Medicare – The Retirement Healthcare Costs Dilemma

It?s also a wise decision to enroll in some kind of Medicare supplemental insurance. This can include a Medicare Advantage plan or Medigap plan. A Medigap plan helps cover the gaps in Original Medicare such as deductibles, coinsurance, and copays.

Because Medigap plans typically offer comprehensive coverage on these dollar amounts, the premiums can increase from year to year. Premiums are also affected by the beneficiary?s age, location, gender, and more.

For instance, Plan G will be the most comprehensive plan available to new enrollees in 2020. That means Plan G will usually be the most expensive plan per person.

For a 65-year-old female, non-tobacco user in the Dallas/Fort Worth area, a Medigap Plan G currently starts at around $101 per month. With a 70 year old woman, the lowest premium for Medigap Plan G quotes at around $112.? This grows with time to $132 at age 75 and $156 at age 80.

Rates vary widely across the country too based on the cost of healthcare in the respective region. People in states like Florida and Washington pay considerably more. Research costs with a Medicare insurance broker to find the options that best suit your personal needs and budget.

In planning for healthcare costs in retirement, purchase supplemental coverage. You can eliminate much of the potential stress and worry over medical expenses during retirement. That will free you to focus on enjoying your golden years.

Danielle K Roberts is the co-founder of?Boomer Benefits?where she and her team help baby boomers navigate their Medicare insurance options. She is a member of the Forbes Finance Council and writes frequently about Medicare, retirement and personal finance.?Facebook | Twitter

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64 Responses to The Big Financial Retirement Mistake You Should Avoid – Retirement Healthcare Costs

  1. Parents were left floundering when the employer addressing Medicare supplemental bailed out. The top tier ($400/month) coverage was no longer being deducted from pension benefits. They had to go shopping and were no longer mentally astute to do so and too proud to ask for assistance. One went without supplemental and upon crunching the numbers for the covered parent it was determined he might as well be self insured. It seems the hawks knew exactly what to charge. There was $200 differential between monthly premiums and out-of-pocket deductible over a two year period.

    Although the decision to obtain supplemental is very much a dice roll it was estimated they flushed over $50,000 prior to the employer bailing out. Since dropping all supplemental they have save another $20,000. Their medical needs were extremely minimal but of course you can never predict such things. Did the advantage plans offer a safeguard against catastrophic health care event? Humana Advantage originally had a $5,000 or 6,000 maximum out of pocket in 2013 it is now around 10,000.

    A recent pacemaker replacement with $95,000 MSRP ($10,000 actual payment by Humana) represented out-of-pocket costs totaling $500. Rather than rely on the self serving medical community to determine if a parent needed meds I elected to wean one parent off of all pills 6 six years ago. The first to go were Namenda and other drugs touted to improve “executive function”. No difference was observed in those leap of faith meds. Anti-psychotic poisons for Bi-Polar disorder were also discontinued despite comments by physician. Turns out advanced years (aging process) greatly diminishes onset of episodes, and those are are easily controlled with single dose tranquilizer. Prostrate meds and other costly substances were deemed equally useless. The current physician doesn’t have any issues with a 92 year old who has been weaned from all medications. Shortly after stopping the mental acuity meds I met a pharmacist at a health fair who had the same perspective. He was of the opinion, “they might serve a purpose for the first 3 or 6 months”.

    It is always advisable to explore the opinion of every physician and invoke common sense. When the first pacemaker was installed 7 years ago the sutures kept opening up. They failed to healed properly THREE times! The heart doctor had no explanation and shrugged his shoulders, while informing he did the “best he could” and planned to pass the patient to another doctor. Hmmm. Although I was on the verge of administering a swift kick in the pants I instructed him to close the wound a third time, and I intended to get the patient a bed wedge to prevent him from sleeping on his side. I theorized his sleeping position was culprit. Side sleeper was exerting too much pressure on the suture, but the team of professionals did not concur. Although this was not supported by my research, the sutures healed normally when he stopped sleeping on his side !! The experts proposed relocating the pacemaker to the other shoulder. Bizarre indeed. That impressed me as a classic case of “passing the wallet”. When the replacement pacemaker was recently situated the process has apparently improved, with the use of external bandages to support the sutures to facilitate healing. However, the replacement process was not without controversy. The doctor wanted to replace the two lead pacemaker with a three lead pacemaker. 3 lead would have been more invasive, and research indicated 40 percent of patients did worse with three lead pacemaker. I had to make the call since you can never be certain when a doctor’s decision is not influenced by the fees generated.

  2. Hi George – You’re opening up a can of worms from me. Because I’ve seen enough situations where an official health diagnosis turned out to be wrong, I’m very cynical of the whole process. I often say we pay doctors not for what they do, but for what we hope they can do. That’s probably responsible for at least some of skyrocketing health care costs. When someone gets sick or injured, they’re ready to pay any price for any procedure recommended. And a lot of them come with little or at least questionable assessment of their integrity. Some people have surgeries or therapies, and end up feeling worse than they did before.

    We’re largely at the mercy of medical professionals, because most of us lack either a background or the time to do the research.

    As far as the cost of supplemental plans, I’ve seen good and bad. My mom had a good supplement, with all the many medical procedures she had, as well as medications, she never had to pay a dollar. But I recently became aware that premiums on supplements, which are quite reasonable at 65, escalate with age. The $100 premium you pay at 65 can turn into $500 by the time you’re 90.

    I get that, because the older you are the higher the risk you present. But at the same time, it forces a greater financial burden at a time when income and assets tend to be drained down due to an extended retirement.

    There’s no perfect solution here, but I think most people will be better off with some type of supplement, rather than self-insuring. If it does little more than cover you for a catastrophic event, it’ll be worth the money paid.

    But as you spelled out, it’s vital to do research and to get referrals.

    Also, I know this is a controversial opinion, but I wonder if there comes a time when getting off meds is the preferred course. If a person in her 80s or 90s is on 20 or more pills a day, you really have to wonder what kind of damage they’re doing. All meds have side effects, and the combinations many of the elderly are on are likely more extreme. It’s an ethical question, and a decision that should only be made by the individual, but I wonder if there’s a time when it’s best to simply pull back and accept the inevitable.

    Maybe that’s a topic for another article. As the population ages, and more people live into their 90s, this is the kind of discussion we may need to be having.

  3. Kevin I total agree that an HSA is a great way to go. And to George my Grandmother told her doctor one time when he wanted to try another medication. “Well I guess that’s why they call it practicing medicine”. Then she said no to the medication. She lived up into her 80’s with only taking blood pressure meds and Bufferin. When asked about pain she said, oh honey pain is just a part of life.

  4. Hi Laura – Good on your grandmother, she’s a real role model. I hope I can be as accepting of old age/end of life as she is. I think there’s a real nobility in accepting reality, and it also seems to make life go better. I’ve seen some elderly fight and claw until the last minute, and while part of me gets it, the other part hopes to handle it with more grace and acceptance.

    My 93 year old uncle did the same thing. His doctor wants to put him on a heart med, and he said no. If I reach that age, I hope I have the good sense to do that as well.

    Getting back to practicing medicine though, you’re grandmother is right on the money with that. They used to call it medical arts (more appropriate), but in recent years it’s become medical science. It’s nothing of the sort. It’s more like they’re fixing a car – they try this and that until they can identify what’s broken, then take the chance that some treatment protocol (which also provides a strong measure of protection from malpractice suits) will fix the problem.

    If we could only recognize and accept that doctors are just practitioners, and not gods, we’d have better control over the whole process.

  5. Trump said many times he and the Republican party have it all figured out to get you much better care for a much better price. Just trust in them and everything will be taken care of. Don’t worry about a thing. Protecting the middle and working class folks is their number one priority. Remember, the plan is on his desk ready to sign, just relax.

  6. Hi Daniel – There’s not a single politician I’d believe if he said that. My thinking for a very long time is until a politician tells us what services will be cut, none of them are telling the truth.

  7. I first wanted to express my condolences on your recent losses, Kevin. (I know I’m late on this). Also, to wish you a very Happy belated Anniversary! In reference to the above topic, a lot of my Medicare patients over recent years have been on upwards of 20-50 medications daily, some prescribed by different doctors. Further complicating this are the generic vs brand names, adding to patient confusion as some were on the same medications, but did not realize this. The costs were astronomical in many cases. When they would try and discuss this, or have a different opinion than that of their doctor, some of them would be dropped as a patient, or their concerns ignored. With the more recent changes in healthcare, my personal experience with an HSA, while good in theory, does not have good results like what is reported in the media. Unless you are younger, have fewer health problems, and able to add money to your HSA, then it does not leave much in there for retirement. I would add $200 monthly, and just having a few healthcare appointments, such as dermatology, which can be very expensive, and with the HSA deductible resetting yearly, did not leave much in the pot. Even with a good salary, and health insurance, I have paid the majority of all my health expenses out of pocket the past 4 years. Looking towards retirement can be very daunting when you include health expenses. I?m not trying to be negative, just realistic in terms of my own experience, and am so glad you are bringing these topics up! My personal wish would be for more, and cheaper, healthcare options for those between 55 and 65 years old.

  8. Hi LA – Thank you for your personal sentiments. I agree with your comments. My HSA has been drained in each of the past two years. Last year I tallied up $8,500+ in out of pocket costs, and that’s with health insurance (but not including the premiums). You’re probably aware I’ve written a good bit about healthcare/health insurance, and if so you know I don’t have much hope as to how this will turn out. I think the current system has to fail, then we need to start over. Very painful, but it will be the only way. The current system is too entrenched, too set in it’s way, and has the support of the political class.

    I also agree there needs to be special provisions for 55-65 year olds. That’s a group that isn’t yet eligible for Medicare, but often have conditions associated with old age, at least the early stages of those conditions. And with doctors practicing CYA, a lot of tests and procedures are ordered “just in case”.

    I’m not surprised patients get dropped by the doctors if they don’t follow their advice. Doctors work on company/industry protocols that not only prescribe recommended treatment regimens, but also provide protection from malpractice suits. They can always argue they followed good/recommended industry practices. If a patient refuses to cooperate, the doctor may drop him or her to minimize liability more than anything else.

  9. The reality of articles like these are that anybody not making over 200,000 a year will never reach these kind of numbers. Having an additional 280,000 just for health care on top of just trying to save and have any kind of retirement is way out of whack in the real world. I just will not happen.
    Not is this day and age, with the monetary policies that we have in this country.
    It’s a rigged system that is set up to funnel money up, not down. Especially in the speculative bubble economy we have now. Most people are not investing, they are gambling.

    These numbers could work if you had the same job from 21 to 65 got yearly raises and never had a crash.

    The nuts and bolts of which plan to use or that plan is a fine discussion of how others do things. That’s not what I’m saying here.

    I have a tendency to think that when we start throwing out these numbers it’s actually stops people from trying. Most people know in there hearts that they will never reach the numbers that are thrown about in the first paragraph. So they don’t try at all.

    There is and never will be a stress free retirement unless your a top 10 percent earner over the course of your life. That provided you do the right thing with what you earn.

    Money is worth less every year.
    Inflation is much higher than is reported.
    Medical costs will keep soaring unless there is an epic meltdown.
    You will never have enough even if you manage to save 280,000 it will be worth half of that by the time 40 years rolls around for you to use it.

    Long term investing no longer works in this system we have now.

    I’m sorry if this is negative. I look at it as being realistic, not negative.

  10. I actually agree with you Tim, saving $280k just to cover medical expenses is a stretch even for the well-off, but impossible for the average person. But it does illustrate the degree of the problem (like any of us need to be reminded). This article is a guest post and expresses an opinion that’s different from mine. But I like to encourage different opinions. The financial optimists aren’t wrong strictly speaking, but their advice, as you say, won’t work for the average person. It’s directed at the ideal life, and advising people what to do when they’re blessed with that. I can tell you I’m not and never was in that camp. But I’m perfectly happy with my imperfect life, including dodging all the bullets and dealing with one crisis after another. There’s a nobility and a satisfaction in that that those who live ideal lives never experience.

    Put another way, I wouldn’t trade my imperfect life for an ideal one. There’s a happiness that comes from surviving chaos that people living ideal lives can’t comprehend. And for what it’s worth, the “rest of us” outnumber the ideals by a very wide margin.

  11. I agree that it would work in a perfect situation. It’s not bad advice if it was 50 years ago.
    This no longer works in this era of time.
    These people don’t adjust and just keep spewing out the same advice because they don’t know anything else.

    Sorry I find it harder and harder to keep my mouth shut anymore.

  12. Here is a example.
    My homeowners policy went up 1000 dollars this year. Out of nowhere. I got a two month warning. So my yearly budget for this gets thrown out of whack just like that. Now I have to dig. It’s no problem. I can deal with it but what if you can’t?
    Where do most get this? When I read that over 50 percent of the population live hand to mouth. That the same amount have less than 1000 dollars saved, period and like it says above how many have less than 10000 saved for retirement.

    They short change money they would possibly have put toward retirement or take it from somewhere else. Or the warehouse it on the books as debt which creates another problem.

    This is the real world. It happens all the time. All my things go up all the time. Every three months something is going up.

  13. Wow, $1,000 INCREASE! That’s why we rent. Our Renter’s coverage is just $32 per month, and it’ll likely drop in a couple of months due to some changes in occupancy (a dog moving out). But I agree, that’s obsurd, especially if you haven’t had any claims. But these big companies are raising rates because they can. Our electric bill keeps going up, and so does our cable and internet. Food and entertainment you can work around, but some of this other stuff we’re stuck with. For the average household, a $1,000 increase in home insurance can be a budget buster.

    On a related matter, I’ve noticed – and I’ve read about – the decline in the quality of housing stock nationwide. As the population ages, and as the middle class continues to get squeezed, maintenance and repairs go undone. A house that goes without R&M for several years can quickly turn into a shack. Some of it is getting so bad it’s no longer habitable. When the owners die, move out or lose it in foreclosure, it’s can’t be sold, except to rehabbers, because you can’t get financing on a dilapidated house.

    So people are staying in their houses, making the payment, but doing little else. I see a lot of that around here, and it’s a disturbing trend. My son and his girlfriend were apartment hunting and he and I went to look at a condo a few weeks ago. The place was a wreck and obviously has been for a long time. Yet they want $1350 per month for it!

    A discussion with an acqaintance who lives in that project revealed that a few years back a group from Oklahoma bought up about 40% of the units after the financial meltdown, and have done nothing to improve the units since. A lot of those big scale property buys by investors after 2007 turned into slumlord situations. Individuals and companies bought houses nationwide on the cheap, put a coat of paint on them, raised the rent and have done nothing since.

    That really sounds kind of third-worldish. And so does arbitrarily raising expenses, for no other reason than to either increase profits, or bail a poorly run company out of a deep hole the got themselves into. I remember hearing about the robber barons of Europe in school, and it seems they’ve made a comeback. We’re all worse for it, but as I always say, all this economic and financial stuff is connected, and that’s the problem.

  14. UP UP UP

    1,000 increase is bizarre. Is that new rate competitive? Recently learned State Farm quote was much more than current rate with different company due to their underwriting that allows ALL dogs regardless of breed. State Farm also pays for roof damage regardless of age of roof. OK, that might be important to some people but it is reflected in their higher rates. No such thing as free lunch. Dog related claims are responsible for 25 percent of all insurance claims.
    My policy went up $50 in ten years but property taxes are now 3,000 vs 2,000 8 years ago. That tax spike exceeds increase in property value by a significant amount.

  15. Hi George – Are you saying the $1,000 ($3k minus $2) exceeds your property value, or the 50% increase in taxes is higher than the increase in your property value?

  16. Property value in 2007 (home purchased) to 2012 was 200K and tax was 2K. That was in accordance with what I believed was the “1 percent rule”. Around 2014 the sneaky politicians relied on homeowners who did not pay attention to their agenda and they covertly got a 20 percent tax increase for a facelift for the schools. I thought property taxes covered all things related to schools so why a special assessment? Do High Schools really need Olympic size swimming pools and grand exteriors? That school fix up rip-off resulted in increase from 2,000 to 2,400 despite no increase in property value. Then a year or two later there was jump to 2,650 for something else, and this year it is 2,950 despite home value of around 230,000. So much for that common sense ONE PERCENT GUIDELINE.

    Meanwhile this road hasn’t been repaved in TWENTY ONE YEARS since it was installed in 1998! But his backward little city in NW Indiana paved two (of 3) other roads in the community last fall. What type of town (that claims it is progressive and vibrant) paves two thirds of the streets in a three street area with 150 homes. SFB mayor did not respond to my email last fall when I sent him photos of the pot holes, but they sent out a truck to patch them.

  17. That’s happening all over George. The town I grew up in saw a – get this – 67% decline in school enrollment in the 1970s and 80s. But taxes continued to go up. The last tax bill on my mom’s house in that town was $12,000. They kept spending money upgrading school facilities, even though the number of students plummeted. I’ve heard that happening in other communities. One community I lived in in Georgia built an $80 million high school. Couldn’t they do it for $40 million??? They also extended road repavement from 17 years to I think 23 years. A lot of the older streets were turning into gravel when we left (which is similar to what we’re seeing in NH).

    The problem with property taxes, and state taxes for that matter, is that most of the money is now going for salaries, benefits and pensions, not keeping up the community. So infrastructure declines while taxes go up, because “there’s no money for repairs and improvements” (forcing them to borrow for it when they get desperate). One thing I have noticed that really bugs me is these government workers (sorry I know you’re a retired Fed) who get something close to no cost health insurance and pensions close to or equal to their salaries. It may be well intended, but it’s a fiscal train wreck waiting to happen. Meanwhile they can’t perform the most basic services. So who are the governments working for, the citizenry or their staff? That train left the station a long time ago.

    Sorry to paint with such a broad brush, but this is a time bomb waiting to explode. Taxes are going up, maintenance is falling off, and a lot of state and municipal pensions have one foot on a banana peel. We’re starting to see shades of Venezuela here in the US, but the collective blinders are still functioning.

  18. The roads in this city are a war zone. The city has there crown jewels.
    There are two real upscale neighborhoods that get everything. Then there’s their showpiece waterfront. Nobody else gets anything. Not a street cleaning, nothing.
    I used to live in one of those neighborhoods. Paid 7000 a year in taxes. That’s why I left. Anyway, yes 1000 is an excessive raise. Never a claim. They didn’t raise it for two years so they figure it was time for some extortion. I can absorb it with no issue but I just wonder what people do who live hand to mouth. I’m thinking of cancelling it. I don’t need it. I can absorb any repair or damage that comes. I own my home outright and I can buy another one if it burns down. So what do I care. I’ll never buy another home anyway. This is my last one.
    I already cancelled my dental insurance, why? Why not. They didn’t give me anything anyway. Who needs it. I paid for my last dental work because the claim was denied. Guess they didn’t think I needed front teeth after my crowns broke getting hit with a flying garbage can during our great winter’s twenty days of twenty degrees and forty mile an hour winds.
    It just the principle of these insurances that are useless anyway. I can make more in a year using the money in something productive.

  19. “I?ll never buy another home anyway. This is my last one.” That sounds like that saying “A conservative is a liberal who’s been mugged”! I’ve heard from others who have said they’re done with homeownership. Check out this article – The Affluent Homeless: A Sleeping Pod, A Hired Desk And A Handful Of Clothes. I just came across it today, and it resonated with me because I’m a “digital nomad” who could actually make this work, or at least a modified variation of it. I plan to write an article on this topic as soon as I can come up with some intelligent observations on it. It’s radical, but I completely get it. Desperate people do desperate things, and sometimes they even thrive for the effort. You just have to think outside the box.

  20. NOTE TO ALL: My response to George about government worker pensions and health benefits has drawn some negative email responses from government workers and retirees. I understand. I know this is a sensitive subject if you’re among that group. But please read this article from the Wharton School at the U of PA The Time Bomb Inside Public Pension Plans discussing the $4.4 trillion public pension shortfall. This is happening at a time when the stock market is at record levels. We can’t tip toe around this issue in any discussion of property taxes, or taxes in general. A crisis is a crisis whether we want to accept it or not.

    Please understand that we discuss a lot of topics on this site that sit outside the comfortable confines of official optimism.

  21. It doesn’t seem all that extreme to me anymore.

    Seriously though, I have started to take somewhat of a stand against all this useless insurance that I really don’t need. They are useless on the whole anyway.
    I don’t even have life insurance anymore.

    My wife doesn’t need it. We have more than enough for her to live on and deal with what she needs. My car is the next thing to go.

    Sorry but this article really got on my nerves for many reasons. I have no patience for the mainstream jibberish that they sell.

    I have five years until my last kid is out of school. Then I’m out. Selling my house and business and me and her are traveling for a long time.

  22. Preach it brother! I think you’re going to have a lot of company Tim. The Bureau of Labor Statistics is reporting 95 million adult Americans were not in the workforce. And they don’t know where a lot of them are! If you’ve ever read “And Atlas Shrugged” I think that provides a clue. Ayn Rand predicted that overburdened, overtaxed, and overregulated workers ? especially the most productive ones ? would simply quit. Some would leave the country, some would go underground, and others would simply find alternative ways to survive.

    I think the next recession is going to turn a lot of people in that direction. Millions are just hanging on by their fingernails right now, and that may become the only option.

    I’m with you on insurance too. Years ago, I worked for life insurance company and the sales manager told us “we’re not in the business of paying claims, we’re in the business of collecting premiums”. That is of course an exaggeration, but it seems to be becoming increasingly true. You pay for car insurance, home insurance and even health insurance for years, then they deny a claim. I’ve seen it happen too many times.

    I think what a lot of the elite leaders of these companies don’t realize is that there are more options for people to go the nomad route than in any time in history. The Internet, electronic money, air travel, virtual services and employment skills, make it easier to slip away than ever before. If that ever turns into a tidal wave, everything as we know it will come unglued.

  23. I’m not. I draw a state pension. I agree on a business level it is a disaster waiting to happen. That’s why I started my business. So if it went away tomorrow I would be ok.

    Here’s a classic example. My mother in law was married twice. Her last husband had a pension from Chevy. He hadn’t worked there in twenty years. Now my mother in law has it and she never worked there. He passed ten years back. She’s never owned a car or had a driver’s license. How does this make any business sense at all.
    I’ll take it because it’s there but I know it isn’t gonna last.

  24. That industry needs to implode. It’s a gigantic extortion ring or mafia Enterprise.
    I’m not participating in it anymore.
    I believe that Kevin. I don’t think your exaggerating all that much.

  25. I’m trying to figure out what’s in worse shape, public or private pensions. Some of these bigger companies are saddled with pension costs from the days when they had a lot more employees. But all the cost cutting has reduced the number of people paying into the plans, while the number pulling money out stays the same as people live longer. Given the math with both, it’s best to have a Plan B.

    Like everyone else, I hope it all somehow works out. None of us will be better off if it doesn’t. But I bear the curse of being analytical, with a strong emphasis on math, and I don’t see the numbers on this working out happily.

  26. The numbers don’t work. They haven’t for a long time.
    Think about it. I have been paid by the state to not show up for the past six years. How does this make sense on any level. It doesn’t

  27. I wanted to write to the people who are attacking Kevin about the pension comment. He is not attacking the fact that you didn’t earn it by working for it. That has always been my beef with people who say I didn’t earn mine.
    I simply took a job that offered these benefits. I didn’t negotiate these contracts. The benefits were there when I took the job.

    If you have a public pension, you are placing your trust in one of the most corrupt institutions there is Government. All these pensions are invested in the stock market. As Kevin said, there are record shortfalls all over the country. This is at a time when the stock market is at all-time highs.
    What’s going to happen when the market finally bursts. That shortfall is going to get bigger. Once governments get desperate enough it will be raided.
    Just know that state governments will be bailed out once they declare bankruptcy. It is always the people who suffer. Your benefit will be reduced or you can lose your health care. Any number of things can happen. We the people do not have the parachute.

    I urge anybody on here who has a pension to have a plan B. I started my own business. I could have ridden off into the sunset and went fishing. Do not count on this being there forever. If your pension outlives you then your lucky. I was 49 when I was eligible. 25 years of service. That is a long time to go counting on this. If I live until 80 thats 31 years of hoping nothing goes wrong. Of course in the meantime that pension loses value by the year in purchasing power.

    These are facts. We need to stop taking it personally that we are being attacked for having it. That’s not what was said.
    This is an unsustainable business model. It’s a pyramid. It will crumble at some point.

    So please, let’s stop taking these comments personally at look at the facts.

    There is much more I could write. On why it is this way. Why your paper money is worth nothing more than the paper it is printed on. The only reason it still works is that people still believe it has value.
    That’s up to the blog writer to educate on that if he sees fit. It’s too long to explain on here.

  28. Thanks Tim, you said it better than I could or did. I totally agree – I’m not saying anyone didn’t earn their pension. If you can last 25 or more years on any job you deserve to have it. But it’s the financial situation connected to these pensions that I’m challenging. From an actuarial standpoint alone, paying into a system for 30 years then taking out benefits for 30 years isn’t sustainable. The proof is in the pension shortfalls both public and private.

    That’ll eventually be resolved by major changes no one will like. Beneficiaries will either see a pay cut or they’ll be paid in inflated dollars (money printed to cover the shortfall), or the tax payers – which includes pensioners – will see their taxes raised dramatically. You can look to the Illinois pension crisis for a glimpse of what’s coming. People will say, “well, it doesn’t affect me because I don’t live in Illinois”. But Illinois is just the tip of the iceberg. Most states have some degree of the same issues.

    Thank you Tim.

  29. People only hear one thing. I understand. They only here that somehow it’s their fault and they shouldn’t have it or didn’t earn it.

    I think I read somewhere that every 6000 dollars of a car purchase goes toward retirees and the benefits.

    I have also read that buyouts are becoming more and more popular. My thought is that someday it might become mandatory.
    The buyout is based on the average life expectancy and your current age. I think you are going to see more and more of that as time goes on.

  30. The buyouts are already happening in the private sector. If I company can reduce their liabilities which is what retirees are then their value and stock price goes up.
    This will be the next shell game after the buybacks of stock play itself out.

  31. It’s also possible that if you have already lived past the average age you might get cut off without anything.

  32. That’s interesting. I hadn’t considered that. A buyout would allow companies and governments to cap pension payouts. They may even offer a reduced amount for an early buyout. I think something like that happened recently in Dallas, TX, with the police department. But we should doubt it will be in any pensioner’s interest, otherwise it wouldn’t be offered.

  33. Let’s say your 65 and draw 40000 a year on a pension. The average life span of a male is what? 72 ( Not sure )

    So that’s 280,000 over a 7 year span. The company is going to people and offering them 200,000 lump sum buyout.
    Then they cut them loose. They are off the books.

    I read where people are taking this. The kicker is if you live to 85 you better come up with something else.
    It also kills off your health insurance.

    Right now it is a small thing. It’s not really on the radar but it has happened. Also, right now it’s optional but I can see a time where it will be a lump sum and that’s it. No defined pension.
    Of course as time goes on pension’s become a thing of the past it won’t matter anyway.

    It’s really almost a no brainer. Especially if people are in debt or struggling the money becomes to tempting to pass on. Of course you loose in the long run but alot of people will see a way out of debt and jump on it.

  34. YES! That actually happened at a company I worked at more than 30 years ago. They got bought out by another company and did buyouts on the pension. One lady who had been there 15 years got just $27,000. She was furious, knowing it wouldn’t help her retire. She wanted the pension as promised. So I guess this isn’t new. But if it exists in practice, it can easily expand. Good catch Tim.

  35. Sorry, I love talking about this stuff.

    So the state every time a contract would be up. They would delay and delay the next contract. The negotiations would drag on for ever.

    It would buy them additional years without giving a raise. Then they would offer a lump sum and a small 1.5 percent raise or so and health care out of pocket going up. The lump sum used to blind half the workforce. Sometimes it would be 10000 or more. Since 60 percent of the workforce was broke and in debt they would always vote yes.
    Then on top of that it would be taxed and it would push alot of guys into a higher tax bracket. It was genius.

    So of course the pensioner looses. These people are professional thieves. Smartest thieves in the world. They put the average stick up man to shame.
    yet, they are the ones who go to jail. The poor.

    Guys used to walk around acting like dope fiends. I got my money, I got my money. If they sat down and did the math they would understand they lost.

    Lump sums blind people. They always will.

  36. Insurance revisited ….

    $650/year premium is tolerable for this structure. Dental coverage? Believe it or not I have found value in a few of the prepaid dental plans. Unfortunately, it can be a chore finding a reputable/honest dentist who is enrolled as a provider. Everyone should read 1997 Readers Digest Article titled HOW HONEST ARE DENTISTS. The article is still floating around out there and readily available.

    Five years ago I got lucky and found a good dentist enrolled in one of the prepaid dental plans offered by Atnea. Although implants were not a covered procedure, providers are supposed to offer members a discount. Six implants and other restorative work totaling 32,000 ended up costing 18,000. As as basis for those unfamiliar with prepaid dental to evaluative the plans; a ceramic crown five years was $600. Upon recently reviewing the plan offered by Atena the cost of a crown is now 800. Careington dental plan crown is $700. Depending on the area of the country most crowns will run 1000 to 1500.

    Began exploring prepaid dental in 1993 and learned many unethical dentists used those discounted fee plans to herd the sheep to slaughter. One scam artist in a high rent district created a treatment plan than proposed I needed seven crowns !! Another dentist who altered my medical records in 1994 was a provider for a plan was caught and reported. Another dentist who altered my records in 1987 was not associated with a plan and he also altered my records. I have caught three doctors altering medical records; 2 dentists and 1 eye doctor. Two got a wrist slap by the regulators but the 1986 dentist slithered away unscathed.

    A plan costs about 13/month. Cleanings, exams and X-rays are discounted so if you only go 2x year for check-ups and cleaning you break even. I’ve used Atnea and Careington. These pre-paid dental are not technically classified as insurance. They are promotional vehicles to generate more traffic to increase patient base. My dentist no longer participates in the plans, but his son recently joined his dad’s practice and he is willing to accept reduced rates mandated by the plan fee schedule. Pre-paid dental is not customary insurance. It is simply a reduced fee schedule for members.

    My enrollment lapsed but the office still offers this VIP patient discounted rates in accordance with the plan. You can’t help but wonder why dentists simply don’t lower their fees. My dentist was obviously making a reasonable profit charging me $600 for a crown in 2015 vs customary $900 charge.

  37. Decades ago, when I landed my first job, the shop steward (it was a union job in a factory) told me there are no good dental plans. That was 40 years ago, and it’s still true today. As you say George, dental plans aren’t true insurance, their prepaid dental benefits.

    The best I’ve seen is Delta Dental. At last check, they’ll pay up to $1,000 in services, including the full freight on two cleanings per year. But I’ve never tested the system for anything more serious than a drilling or a cavity filling replacement. And as I remember, I had to come out of pocket quite a bit for those. Meanwhile, the premiums come pretty close to the benefit amount, on an annual basis.

    I’ve seen full health plans offering dental coverage, but I’m skeptical. Even worse in my experience are the vision plans. If you’re lucky, they’ll pay 50% of the cost of services, and have only a small number of participating providers. Usually those are small independents who are trying to build a practice. And ironically, some optometrists actually charge higher fees if you use insurance. That’s because you lose any discount offered by bringing insurance into the mix. My guess is they prefer offering discounted services, because they’re paid more quickly.

    But much like our pension discussion, it’s pretty clear that healthcare insurance of all types is rapidly turning into a scam.

    I read a couple of articles that discuss why costs and premiums have been escalating under Obamacare. There’s a provision in the law that limits how much an insurance company can make in gross profit. Don’t quote me on this, but I think it’s 40%.

    But here’s how that plays out…

    40% of $10,000 is $4,000. 40% of $20,000 is $8,000. With this arrangement in place, the insurance company has an incentive to allow and pay higher claims without challenging the providers. The insured/patient is the loser. The whole system has created a perverse incentive to raise healthcare costs. Of course, we all know healthcare costs were also rising out of all proportion to the rest of the economy even before Obamacare became law. But it’s just accelerated since.

    It’s hard not to be cynical in light of all the various corrupt systems we’re now living within. But if history is any guide, corruption usually precedes a blowup. And the more corruption and distortions there are, the closer we are to the day of reckoning.

    We certainly saw that happen with real estate and mortgages a decade ago. Were it not for the government bailing out the lenders (rather than the homeowners), the situation probably would’ve corrected. House prices would’ve come down, people wouldn’t need giant mortgages, nor would there be any need for creative financing, like very low down payments or no income verification.

    But we have to wonder what rabbits the feds will pull out of the hat when some of these other bubbles burst. Despite their dreams of deity, they can’t save all the systems and bubbles. The longer they do, the more we’ll continue to pay for everything, and the worse services will get.

    That seems to be the big picture problem with all these distorted systems. But I don’t think people want to connect the dots for fear of realizing things aren’t as good as our optimistic selves want to believe.

  38. Too big to fail and quantitative easing.

    Has any expert generated an estimate how many billions were sacrificed by savers with modest amounts parked in banks and credits unions? I’m referring to Joe Citizen with 5 or 6 figure saving accounts that dropped to zero interest when big brother bailed out the shady banks and resulting ZERO interest rate. That dirt low rate served to bolster the market, but not everyone was vested in the market during the ten years of artificial boost which stalled around 2018 April.

    Do artificially low interest rates result in increased consumer debt?

    “With the Bank of Canada holding interest rates at record lows, a new poll conducted by Ipsos on behalf of MNP Ltd. shows that 31 per cent of Canadians anticipate taking advantage of the rates by increasing debt and consumer spending. While credit can be an incredible tool for building one?s credit rating and pulling through financial struggles in a pinch, excess spending and credit reliance can all too quickly lead to a dangerous cycle of debt that?s difficult to get out of”.

    Meanwhile in the USA vehicle repossessions are at impressive high levels.
    2019 Feb article ……….
    A Record 7 Million Americans Are 90 Days Behind on Their Auto Loan Payments

  39. You just summarized the great middle-class squeeze of the 21st century, George. I agree with everything you’ve written. Very low interest rates not only hurt the income of savers, but also forced retirees to dip into the principal, causing them to drain down wealth. And as you correctly point out, low interest rates encourage people to borrow more. The two are also intimately connected. If people are losing income on their savings ? and principal from making withdrawals to pay living expenses ? they’re being forced to borrow to make up the difference.

    This is why low interest rates are less of a stimulus and more of a slow acting poison. I saw that information on rising auto repossessions, which has been going on for a while now. I’m expecting mortgage defaults to follow suit, especially since rates are no longer declining.

    What always got me about the near zero interest rate policy of the Fed was how the banks were paying 0.25% to borrow from the Fed, then charging 20%+ on credit cards. If that isn’t a scandal, I don’t know what is. Meanwhile, the lower interest rates on auto loans and mortgages caused both to rise dramatically in price. So while the consumer may have saved money on interest, he gave it back through a higher purchase price. In the end, big business won, and consumers lost – even if it didn’t feel painful on the way down.

    I wish you didn’t get me started on this!!!

  40. You can see how this doesn’t work. Let’s say you make 80,000 per year.
    In actual cash it’s about 60,000

    So let’s do some math. Based on a family of 5
    Mortgage 12,000 per year.
    Car payment 3000 per year. ( That’s 250 per month ) most are probably higher. Double this if you have more than 1 car.
    Gas 3,000 per year
    Repairs and maint. on cars 1500 per year. Oil changes, tires, brakes. Just the basics
    Car insurance 1000 per year.
    heat, electric 2500 per year
    Water 800 per year
    Home owners 1000 per year
    Cable 2500 per year
    Food 9500 per year ( No eating out )
    Clothes, Haircuts, school supplies etc 5000 per year
    Entertainment Concerts, movies, eating out, hobbies 3000 a year ( Being modest here )
    If you pay your own health care 12000 per year for a decent family plan. If you don’t, consider yourself blessed.
    Dental 1200 per year.

    I’ll stop but I know I’m missing things. That leaves you 3000 per year for an emergency fund, retirement savings or 250 per month.

    You can save more if you cut down on things above. i realize this does not fit everybody but I think it is average.
    That’s provided you have no other loans other than car and home. No credit cards. You never take a vacation ( Which is not reality ) Most take one a year.

    This can work if we had no inflation. You got regular raises and held the same job for 40 years. The stock market never fell. You never got sick, lost a job or had any major home repairs. ( hot water tank ) 700 dollars roughly. That’s two and a half months of savings.

    This is the reality of where over half the population is. Not numbers above are completely out of whack with the real world. They will never work. You can see how this puts over half the population in the poor house.

  41. I’ve done a similar job crunching numbers Tim, using $75,000 and $100,000 in income. I came to about the same place as you. Some expenses were higher, others were lower. But in the end, there is little left over for savings or debt reduction. Of course, the absurdity of the income numbers you and I used is that they’re well above the national median household income, of about $61,000, with an average full-time wage of about $42,000.

    I think this explains, and justifies, the statistic that 78% of American households live paycheck to paycheck. Even those making over $100,000 can find it tough managing on that income, particularly if they live in high cost areas.

    One issue I have (probably you do too), being self-employed, is the self-employment tax. Since I have to pay both the employer and the employee portions, the tax rate is 15.3%, compared to 7.65% for salaried workers. Unfortunately, I have very few business deductions to lower my net income. We’re one of those cases where our FICA taxes are substantially higher than our federal income tax. That’s almost never figured into household income/expense analysis.

  42. Yes, I was generous with the 80,000. If the medium income is what you say ( I’m sure it is ) then both parents are required to work. That puts the childcare, daycare into action. Which is highway robbery.

    My taxes are the same with are business also. I pay 15 percent like you said and then another percent for any profit I make in addition.

    This is why people do not have decent retirement savings. Like you said in previous articles. The popular sentiment is that it is our fault. Maybe some but not all.

    The game is rigged. Like I said, 50,000 to 150,000 people have not much prayer. They are right in the kill zone, financially speaking.

  43. I heard this interesting story yesterday. This guy developed a software that his company uses to map out title and deeds for people’s land in rawanda.
    They have never had a title a deed system for people living in the villages surrounding the city.
    He called them shanty towns. With the full cooperation of the Rawanian government.
    His reasoning was that once people have deeds for there land they suddenly have the means to build wealth because now they own something. Ok, sounds good in theory. Your talking about people who live on 300 dollars a year. No water, electricity.
    Of course he say’s now they can go to a bank and borrow to build businesses and wealth.
    He never mentioned once any kind of financial training or helping the people understand how to handle money. They have never had to. It takes just a much effort to learn how to have money as it does to survive how they did.

    All it’s going to do at the end of the day is cause people to live like boobus amercanus. They are suddenly going to be handed 20000 dollars after never having a penny most of there lives with no support or understanding of what borrowing and debt do.

    Talk about opening up a can of corruption worms. Of course this is another billionare who has no real understanding of how most people live.
    This is typical of the day. You can’t borrow your way to prosperity.

    It just reminds me of the idiotic financial planners we have over here. Who live in la la land. Selling the people there crap they know in their heart doesn’t really work but who cares, right? As long as they get there fee it’s all good.

  44. So if you think about it. The president of Rawanda has said that he wants his city to be the singapore of Africa.
    These towns are connected to the city. It’s prime real estate. They can’t just go in a boot everybody. Politically it is a bad move.
    So all these people will go into banks thinking they have money to spend or borrow now. You know most businesses fail. Then what? They will still be on the hook for the money and when they can’t pay the bank the bank will seize the property. Sell it back to the government for nothing and now legally they can remove people from there homes. Not our fault they didn’t pay. Everybody will just call them deadbeats and what not.

    Now they have legally gentrified a whole area. it’s perfect. They use this poor slep billionare to do their dirty work for them. He thinks he is helping but he is a pawn.

    If these people were smart. They would take that deed and sit on it. Wait for it to happen all around them and sell the land for max gain as they can and run like hell.
    That’s what I would tell them to do anyway.

    I don’t know why I am writing this. Just had time, I guess.

  45. They do it here. Instead they use the reassessment tool. They jack the prices of up these homes and force people out of an area because they can’t afford the taxes anymore.
    Suddenly two years later those homes are being taken down by some developer who got the land for pennies on the dollar from the city and with a ten year tax break.
    Boom, you have legally forced people to move, taken their homes. All in the name of progress.
    The mayor gets re elected because he is rebuilding the city. look how great he is.
    Nobody listens to the poor people who got booted, because, well they are deadbeats anyway. Who cares.

    The system in action.

  46. That Rwanda story is interesting in a sad way. The better way I think was from a popular minister – Bruce Wilkinson who wrote the Prayer of Jabez. He came to our church and did a pitch for supporting small scale farming in Africa. As you said Tim, people have no economic stake in much of Africa. He said money won’t help them, but teaching them how to grow food and start businesses would. They reported good success in transforming peoples lives. As the saying from an unknown source goes “Give a man a fish you feed him for a day; teach a man to fish and you feed him for a lifetime.” That’s the basic principal. It’s all about economic empowerment. Until people get that – which basically means being able to develop a self-driven cash flow – they’re economically lost.

    The other thing I’ve heard from various missionaries is the single biggest need in the third world is water. The surface water in most of these regions is badly polluted and ridden with disease. There are ministries dedicated to helping people drill for clean water, and they say that also improves lives by giving them water to grow food and avoiding disease.

    Giving title deeds to land is a Western concept, and only sets people up to be taxed and have their land removed by eminent domain or by the whim of the tyrant du jour. It’s like trying to impose Western style democracy in the Middle East, and other areas with long, deep tribal traditions. It doesn’t work because it isn’t part of the culture, and also because democracy requires an economically engaged citizenry. No matter what any statists or social engineers believe, you can’t separate economics and freedom.

  47. I totally agree with the teaching part.
    That’s what I was saying. Just giving then access to money isn’t gonna help. It’s a setup for failure.
    Anyway, I think that’s what bothers me the most. Is how people just get taken advantage of all under the guise of helping them.
    It happens here everyday. People just get blindsided by and taken advantage of by the system. Just like the middle class here.
    You have 1000’s of people just staggering around our cities with no upward mobility at all. All the decent paying jobs have been shipped overseas. Leaving all these people with no chance.

  48. THE GAME IS RIGGED !! Sounds like Tim K has a feasible concept for a board game to replace Monopoly. As a wanna-be Ralph Nader I’ve seen the seedy side of corporate slime and inept/corrupt regulators who ignore their obligation to protect the hapless masses.

    After resigning from the IRS I went with the 14th largest bank in the nation headquartered in Florida. It was soon apparent they were engaged in a monumental forced placed insurance scam. I was soon walking around with a concealed micro cassette recorder while questioning employees in various departments. This gang of white collar criminals intentionally failed to document proof of insurance submitted by customers with car loans. In order to profit from this “oversight” the crooked bank teamed with equally larcenous insurance agency based in Chicago. Since banks were not allowed to offer or provide insurance products back then they needed a company that would kickback some of the forced placed insurance coverage on the vehicles with outstanding loans. In order to maximize illicit profits this bought tons of car dealer paper to herd the sheep to slaughter.

    Upon contacting the local state insurance commissioner he told me, “the bank was stonewalling him” and “the bank was sharing in the insurance premium”. So, the 800 pound gorilla was essentially immune from the regulators? A few years later, after the guano hit the fan, this bozo would deny we ever spoke.

    Upon contacting EVERY Florida agency entrusted with protecting consumers I encountered similar results. The Florida Comptroller was angered when provided with sanitized (name removed) account documents illustrating the bogus account charges. She claimed those documents were “bank property” and “complaints from bank customers were relatively few”. Ohhhh? Despite my best effort the scam was allowed to continue for three more years and was eventually exposed by class action remedy. 300,000 bank customers were awarded a paltry 18 million in 1991. 12 million after the lawyer overhead. 300,000 victims was relatively few? Once again I contacted the comptroller and she was dancing a different tune but remained arrogant and defensive. I estimated the 16 million settlement represented 1/3 of ill gotten gains.

    In the aftermath of my former employer’s settlement FIVE other banks stepped forward and revealed they had the same “computer glitch”. Yep, everyone was in CYA mode and the theft was attributed to a technical snafu. The employees I interviewed during my investigation were fired, despite the fact they only volunteered factual information, such as the gal in the insurance department who showed me duffel bags of insurance documents submitted by customers being shipped to the shady insurance company – without first being registered by the bank.

    Rather than reveal the bank intentionally failed to document proof of insurance submitted by customers, the class action lawyers and the regulators hoodwinked the victims by asserting the real problem was failure of the bank to “properly notify the customers of the surcharges being levied on their account”. No mention was made of the extreme interest rates on those bogus insurance charges. Usury !!

    What should have happened? This diligent whistle blower should have been embraced by the so-called regulators and newspapers. The bank should have been made to reimburse every customer for actual damages and punitive damages, in addition to a massive fine for fraudulent conduct. The whistle blower should have received a tidy sum for services rendered. If the regulators acted when contacted they could prevented 500,000 bank customers getting shafted by six different banks from being victimized for countless millions. None of the major newspapers I contacted were interested in doing a story that might alienate a deep pocket advertiser.

    I sometimes GOOGLE “Forced Place Insurance Scam” and am not surprised to confirm it remains a favorite method for financial institutions to scam their cherished customers.

    Time does not permit me to detail my exhaustive effort to reel-in the largest retailer in the nation with a class action lawsuit I structured in 2006 regarding overcharging. The vultures at a reputable Chicago law firm were presented with two class action cases. They immediately accepted one of the cases but upon deciding to abscond with the overcharge case and file it in CA they dropped the first case (magazine subscription fraud) and fell off the radar screen. The retail giant tied them up in court for three years and entered a hush-hush settlement for paltry 1.5 million.

    Don’t ask me why the Attorneys General of every state never acted in concert to reel-in this retail giant for habitual overcharging. I actually got a corporate buyer to reveal the mainframe frequently overrides lower prices set by store managers, creating the conflict between the price at the product display and the price charged. WHAT? Another computer glitch !! Needless to mention the #1 retailer was the worst offender in terms of addressing and correcting the problem. I documented overcharges at other retailers during the 6 month period I was assembling the case.

    Eventually learned CA was pursing the same retailer for overcharging. In 2009 the CA Attorney General stipulated in they must implement extreme safeguards to prevent overcharging for a three year period. At the end of that 3 year period it was determined the retailer failed to comply!!

    I was an “engaged citizen” and continually encountered dead ends. Maybe Ted Kaczynski had the right idea and only needed some assistance with target acquisition? It was quite ironic the thieving bank subjected me to a pre-hire polygraph !!

    These events bring to mind two individuals; the Russian comedian who coined the phrase WHAT A COUNTRY and
    Gordon Gekko.

  49. George – As well-intentioned as your efforts may have been, I’m not at all surprised it turned out the way it did. Big business and government agencies are two sides to the same coin. We often like to think that politicians or agencies are either pro-business or pro-government. The truth is, they’re both and neither at the same time. They’re on the same side. Business gets their legitimacy and legal protection from government. And government gets ? we can only guess. Cushy positions when they leave their government jobs? Kickbacks? Re-election/reappointment? We can only speculate. That’s why I’m done with the political system, I’m not voting anymore.

    Politics are what they’ve been for centuries, corruption masquerading as the public good. The acient perverted “golden rule” dominates, whoever has the gold makes the rules.

    I’ve given up worrying about corruption anymore, I just assume it’s the order of the day. The best evidence is the fate of whistleblowers. They get tarred and feathered as if the corruption they uncover is sacrosanct.

    But what really gets me going is how people will be prosecuted for looking for loopholes in the system. Why shouldn’t they, since they’re just being ripped off in the first place? They’re just trying to survive within the system they know to be corrupt.

    I read something interesting a few years ago. A writer said the difference between an American and a Briton on one side, and a Mexican and Italian on the other, is that the Mexican and the Italian know their government is corrupt, and they protect themselves accordingly. The American and the Briton pretend their governments aren’t, and are completely disarmed. The bottom line being government in all four countries is corrupt. It’s only the perception the people in each country have that changes the public face of it.

    Personally I think it’s embedded in human nature. Much is made of synergy in a positive way. But I think synergy is mostly negative. Since it involves groups, it’s easier for the corrupt and the incompetent to hide safely from accountability.

    I think what I’m saying in summary is that this is an age-old problem, and we’re never going to fix it. All we can do is the best we can do to survive it. Some people think the best way to do that is by becoming as rich as possible. That often moves them toward corruption. The cycle becomes self-perpetuating.

    I think that’s where were at.

  50. So I wanna say something else here.
    I never would advocate violence to solve your problems in any way shape or form. Human institutions are corrupt. It’s in our nature to be.

    They will always be corrupt. My thing is educating people to the awareness of it. I spent many years in a government entity. The corruption was rampant.

    I’m very aware of it. The stories I can tell would make anybody sick what these entity’s do to basic people. I avoid them as much as possible.
    I pay my taxes and obey the law. That’s the way to go. Educating people and help them avoid these things as much as possible is what I would rather do.

    It’s quite a story George. Not surprising at all.

  51. That is exactly it Kevin. I know the system is corrupt. I expect it. I just adjust accordingly. I try and talk about it and throw stories out there for the reason of hoping people will read them and understand what they are up against.
    Learn how to adjust accordingly.

    That is always my hope, anyway.

  52. April 30 is the 10 year anniversary of the Chrysler bailout.

    PundiFact ranked Obama’s boast MOSTLY FALSE…………

    Obama says automakers have paid back all the loans it got from his admin ‘and more’ By Steve Contorno on Thursday, January 22nd, 2015.

    All told, the Treasury Department reported that the program cost taxpayers $79.7 billion, of which $70.4 billion was recovered. Under that estimate, the program lost about $9.3 billion. In April, the Congressional Budget Office estimated that the program would end up costing about $14 billion.

    Meanwhile the huddled masses worry they won’t need a new water heater or dental work …..

    47 percent of Americans “can?t pay for an unexpected $400 expense through savings or credit cards, without selling something or borrowing money.” PunditFact rated that claim TRUE.

  53. To me, the ultimate indication as to where the government’s “heart” is at was demonstrated during the Financial Meltdown. They bailed out “too big to fail” institutions, particularly the banks, NOT THE CITIZENS. That showed the cozy alliance between government and big business we’ve been talking about. And BTW, the Chrysler bailout you’re talking about was the second for them. Jimmy Carter authorized the first one back in 1979. A good friend of mine raised a good question a few years later. “They’re bailing out Chrysler. But will they also bail out the struggling butcher shop on the corner? Where do they draw the line on bailouts?” It was an question that said more than it asked.

    Today the relationship between government and big business isn’t even questioned. Those who dare to blow the whistle on it get discredited or crushed. I was in the mortgage business when they were giving away loans to anyone with a pulse. Subprime for people with bad credit, zero down for people who had no money, no income verification and expanded debt ratios for those with insufficient income. Many of us knew it wouldn’t end happily. But it was sanctioned by the Feds. (Nothing ever happened in the mortgage industry without at least the implicit approval of the Feds, it’s one of the most regulated industries in the country). I also believe that’s why no one got prosecuted for the meltdown. All roads would have lead straight to the top, to the regulators and even to three white house administrations. Cover up, bail out, and move forward.

    Another example. The TARP was widely reported to be $780 billion. But several years later, Bloomberg reported it was actually $8.1 TRILLION. No one was held accountable for the discrepancy, despite its massive size.

    This is what I mean when I say we just have to learn to live with this stuff. It’s going on all over the place, like business as usual. Our job is to find a way to live as best as we can within the scope of that corruption. What I hate is when taxes get raised to pay for the “mistakes” (systematic corruption), or premiums get hiked/claims not paid with an insurance situation. That’s when the corruption hits us where we live, and we can’t escape.

    You can’t help but get very negative in discussing this stuff, which is why I try to ignore it. It’s not that I don’t care, but more that I realize it’s much bigger than me and I’ve got too much to do in my life to think I can have any influence. When it comes to corruption, the only strategy that works is to let it run its course, clearing the way for real reform. Now all we get are empty promises and hollowed out regulations that cure nothing.

    Now I need a drink…

  54. That’s always the issue with dealing with numbers that can’t ever be tracked by the average citizen’s.
    We have zero way of telling if this is false or accurate. Numbers are constantly manipulated.

    I am surprised the auto industry is still functioning. The Automobile has become less and less affordable. The rise of ride shares to me is an indicator and the renewed interest in a rail system. ( At least here )
    Many younger people are choosing not to drive. Many younger people and some older ones also are ditching there autos for using ride shares daily. Cheaper than owning and maintaining a very expensive thing that holds no real value.

    Autos are one of the most overpriced and waste of money things out there. My opinion.

    There’s no real way that can last as an industry. I just don’t see it.

  55. I think the problem is that the numbers have gotten so big as to be incomprehensible. Think about it, billions and trillions of dollars. Most of us can’t wrap our minds around that. There’s also the unstated acceptance that “money” is coming from some magical source, that it has no real tie to the economy (and why not, the stock market doesn’t either). It boggles the mind that 20% of the federal budget is financed through debt, not taxes. And that’s during an expanding economy. I’d like to see taxes increased to the point where spending will be 100% covered by tax revenue. Only then will we have intelligent discussions about what needs to be cut. But as long as there’s a 20% subsidy (if it’s even that low) coming from non-tax sources, everyone’s content to continue as we have been. It’s all about getting something for nothing.

    You’re right about cars. I think they’re pushing electrics so there can be a wholesale change in the industry forcing people to buy new electrics. But they’re still not practical. My wife and I are going with one car, and I’ll Uber it when I need to go somewhere and I don’t have the car. Of course, with me working from home, we can do that. Not everyone can. But as more people become self-employed, which I think will happen by necessity, more will either go car-less or reduce the number of cars per household. That will be a disaster for the auto industry, especially if they stop making gas powered cars, and electric sales don’t reach expectations.

    This stinks of yet another calculated assault on the people. Big business is carrying it out, and government is blessing it. Same ole, same ole, right?

  56. No matter the corruption Kevin, people will always find away around it. As things die, new things pop up to take it’s place.

    Cable has been dying for ten year’s. There are more and more streaming services coming online.
    The Music scene died in the old form. Streaming was the future.

    I’m starting to do this with insurance. I have really looked at the numbers and realized most of it is useless.
    My dental insurance for example covered as much as my premium. What was the use. I save and invest that money and pay for a cleaning or dental work myself.

    My point is that if we change our mindset and deal with things in reality we can adjust. Just know going in government is corrupt. Big business owns the legislative branch.
    They have no power anymore to effect or help everyday people. Don’t expect it. The game is rigged. It is not set up to benefit the people.
    Kevin, I’m with you. I have not voted in 15 years. It is no longer a process that matters to everyday people. One puppet as president is as good as the next. They are stuck in a system that stops any change even if they have good intentions.
    There are many things that have been brainwashed into us that we are told we need but in reality we don’t.

  57. I dread the electric car. Like I wanna stop and have to charge batteries in the middle of winter. Or plugin whenever I go.
    Good god, that sounds horrible.

  58. As Mark Twain famously said, “If voting made any difference, they wouldn’t let us do it.” But it actually does make a difference, but in an unexpected direction. Voting implies agreement, and is thus a validation of the status quo. Charles Hugh Smith has argued that if enough people stop voting, it will clear a path for a third party to come on the scene with fresh ideas. It’ll take a while for that to happen, but what other choice do we have? I’m not seeing much difference between Republicans and Democrats, at least not when they get into power. Each speaks the language of change on the campaign trail, then defends the status quo when voted into office. It smacks of people who know the masses can be played for fools. We need to stop playing fools.

  59. I have to admit that is another thing that shocks me. When I see these rallies and speeches and how many people still buy into this process. Cheering and yelling for their person of choice. Like it still matters.

    The new trend is paying all these high profile actors and actresses to talk up voting on social media. Like your un American if you don’t vote.
    Good god, the dribble that comes out of these people is almost as bad as the people running themselves.

    There are no differences.

    I’m just shocked people still believe in this.

  60. Here’s even a better one. I lost my best friend of 35 years because I wouldn’t take a stand against Trump and vote for Hilary. He hated him so much that he said because I didn’t respect him enough that we can no longer be friends.

    I grew up with this guy. We we’re kids together. I am still shocked by this more than two years later. We haven’t spoken since.

    I’m shocked that people would do this over nothing.

    We just have totally lost touch with reality as a people.

  61. I’ve thought deeply about this Tim. There are a lot of different religions out there, not just those that ascribe to a higher power, as we traditionally understand religion to be. For many people, that religion is based on the political system. They create their own gods out of these politicians, and “heaven” is the outcome if those politicians are successful in getting their platforms through.

    The problem is, few of those platforms ever go through. And the ones that do, are only partial. So the best anyone can hope for is a partial outcome. Usually, at least in recent years, those partial solutions only make things worse. We have a conglomeration of partial solutions, that function like hybrid computure programs.

    But as you say, it’s pathetic people still have faith in these false religions. I often wonder if the antichrist referred to in Revelation is government. It very much is a modern Tower of Babel, a construct of human hands designed to reach heaven. That one had an unhappy outcome, and this one is going the same route.

    But people continue to believe in it, and to have faith. They believe the only reason these policies don’t succeed is because everyone doesn’t get on board. When your friend terminated your friendship, he was doing it because he interpreted your lack of support for Hillary as you opposing his religion.

    There are many such false religions. Just tell any of these faithful followers of a rising-stock-market-forever that a crash or a semipermanent bear market is coming, and watch the reaction. If your financial plans are based on an eternally rising stock market, you may be hostile to anyone with a different opinion.

    Consider yourself blessed that you’re not part of one of those false religions. There’s nothing liberating about any of them, because it weds your existence to false doctrines and beliefs.

    Have you ever noticed how many of the political faithful seem to be unhappy most of the time?

  62. There are many false religions out there. Sports, Entertainers, Money, politics. I was amazed to see on TV how many people go to the NFL Draft. They show thousands of people standing outside behind ropes all up and down the street. Screaming and yelling. Wearing costumes.
    They can’t get in. The NFL elites could care less they are out there but I thought, How sad. This is what we have turned into.
    People who seem to have completely taken leave of reality or their senses. I see a guy swiling beer, with a costume on and thought, that guy is probably a financial planner or lawyer giving advice to people. These are people we listen too?

    It’s sad. I wasn’t mad when that happened to me. I was sad for him. He fed into it just like everybody else.

    Makes sense what you say. I’m sure that is the case. It seems to get worse as time goes on or maybe I just notice it more.

  63. Hello, My name is Diane. I wanted to know whether I can save money on taxes for a Roth Conversion (converting from a traditional IRA to a Roth IRA) by moving the traditional IRA funds into my employer’s Defined Contribution plan then later into my Roth IRA. My employer’s Defined Contribution plan is a 401(a), I think. You’ve written about this tactic but only for a 401(k).

  64. Hi Diane – Roth IRA conversions are highly personalized. There are many different financial and tax considerations, as well as future income needs that have to be considered. My recommendation is to sit down with a CPA and discuss the potential outcomes. Even if you don’t have a CPA, it will be worth spending a couple hundred dollars for a consultation. This is the kind of move that could end up costing you thousands more in taxes if it isn’t handled right. I would avoid trying to get conclusive answers on the web. No one can give you a concrete answer without having detailed knowledge of your current tax situation, and your future intentions.

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