I'd suggest a book entitled "A Random Walk Down Wall Street", sorry I can't remember the author's name off the top of my head, but he spells it out in pretty simple terms what you need to do to retire comfortably.

The "retirement for dummies" type book is "The Wealthy Barber", and unfortunately, that author's name eludes me now as well.

Both propose a simple plan of investing a minimum of 10% of your earnings, one just has more detail as to how to go about it.

Wish I'd have started sooner.

Waxy

 

I'm like Archie Bunker, I have all my money invested in staying alive.

 

Good question. I can't see that far ahead. What I can see is that we're going to face some serious financial trials and tribulations long before that, so maybe I don't want to see that far ahead. We no longer have foreign trade manufacturing markets to expand when interest rates go up, and that will put the lid on the last decent investment growth area, domestic construction. At that point national debt service will greatly expand and I think the government will cut some sort of politically acceptable deal with the pre-baby boomers, maybe secure their paid in portions with restricted bonds, and divert that tax revenue to the general fund. That would buy whatever administration has to take the fall on that enough time to escape into history before the bonds come due. Younger people will then have no 'official' retirement program, merely an expansion of the current sham of fund investments. So one way or the other, social programs are going to eventually explode to maintain subsistence levels for those retirees unable or unwilling to fund their own retirements, and that means the bulk of retirees. The remaining work force will shoulder a unenviable tax burden. Redemption of the bonds would be an interesting scenario.

 

georgedavila---


The huge tax burden you speak of, that seems the most logical outcome. But how will that affect the ability of everyday people to invest for future growth or, worst case scenario, to keep what they have?

I guess the essence of my question boils down to are we looking at a depression followed by an indeterminable period where the US is a financial backwater or are we looking more at something akin to the sacking or Rome by the Goths and Visigoths?

Whistler

 

You all know that there's only one problem with Social Security and it starts with the letter "g". Hint: it has three syllables.

 

Hey...i got an idea. Lets blame SS on canada, start a flame war that the moderator will have to fix later, insult six people using profanities, and then hijack the topic and debate which is better, light beer, or dark beer. Ok,,,,maybe not but its the way most of the other threads have been going this week...

I don't plan on getting anything out of SS.....Start investing now

 

I can't answer for the ability of people to invest for future growth. Many of the better investment pools have always been closed private placements and that's already getting tighter. The mutual fund game of tax deferred earnings investment may well turn into a trap in the future as taxes are increased to service national debt and fund social programs. The question there is if equity markets can provide enough growth to offset increased taxes. Good luck to wage earners with their future tax burdens.

We're without a doubt well on our way to a two-tiered society, the haves and the have nots. How long that actually takes will be determined by our holding action on federal tax increases (other countries are looking closer and closer at our levels of debt accumulation at rock bottom interest rates which will have to be rolled over) and our economic future. The GNP is currently being driven by consumer and government spending, the question there is how much personal debt individuals can continue to absorb and how much deficit spending our bond rating can sustain without true economic expansion creating jobs and positive trade balances.

We have the world's largest and richest economy and are/were a republic, so our national wealth has sustained us during our economic decline for the past 20 years. That same wealth is currently being pissed away at a much faster rate, but it'll take a long time for us to ever become a financial backwater. Don't forget that 5% of the population pays 95% of the tax bill. We're back to the haves and the have nots, there will eventually be no middle class as we now recognize it. The have nots will adjust to a much lower standard of living and accept it because much of it will be subsidized by the haves. As the English once put it, one has to keep the natives in a passive state by supplying them with their basic necessities. England, the major world power a century ago, now lives in genteel poverty.

We have a powerful military and you can rest assured that the haves will not let that decline to a point where invasion would even be a consideration. And there are always plenty of fundamentalists to man the garrisons. During the Roman empire the only pensioned jobs were in the military. We're well on our way to making military service not a requirement, but a sought after career. Those without that desire will gravitate to civil service to become a type of middle class, drones and enforcement with above average income and benefits.

That's the way I see it, hopefully someone can provide something other than flag waving and testerone to change my opinions.

 

I have 3 kids, two of whom are voting age and exercise that privledge. They are probably more conservative than me on many issues, but I've stressed one issue to them for years. Dad's rant: "Don't let the current politicians give away your future. Vote as a block against the AARP, other Senior groups and liberals because THEY are your enemy. All three of them want you to make their lives more comfortable today by mortgaging your future. Don't let them. Don't let them expand the size of the Federal Government, Social Programs or increase your taxes. Anyone who tries to do so should be voted out of office, regardless of their party affiliation."
I just wish that more of today's younger voters had parents that educated their kids similarly. Unfortunately, the reality is that parents don't talk politics with their kids and the only people who do are liberal educators that are part of the problem.

 

I don't think that this is much of a secret. However, the my generation is better about putting money in 401ks. But as georgedavila mentioned, my generation will be too busy paying for the baby boomers retirements to save much once they start tapping the bloated hog called governement entitlements.

There's probably little that can be done about it since the baby boomers are the biggest generation out there, and the older you are, the more likely you are to vote. They'll be voting in a 300% increase in benefits and legalizing 80 hour work weeks and 90% tax brackets.

 

Maybe euthanasia can become a legitimate cost-savings program.

sarcasm mode off

 

Must be nice, I think my sarcasm mode got stuck in the 'on' position about 20 years ago...

 

I think the biggest obstacle will be the combination of debt service on the ballooning national debt, still paying the social security taxes which are now being diverted to the general fund and coming up with new social services tax revenue to fund retirement for those who will need it, probably the general population.

Each $1 billion of deficit and descretionary (clever word for non-budgeted spending) spending requires $80 million of debt service at an eventual 8%. In a work force of say 80 million, $1/yr per worker. With ten years of deficits averaging $250 billion a year being the current forecast (always low), tack on $2500/worker for additional debt service.

Leave social security at 7.5%, that'll continue flowing into the general fund under a different name.

In ten or so years a new form of retirement, probably lumped into general social services, will be required for those unable or unwilling to save for their own retirement, call that 7.5%.

Somebody immediately says 'I make $100k/yr, so another $10k of taxes won't bother me all that much'. Our system of taxation is based on a graduated basis, and the average worker at today's income levels grossing $20k flipping burgers can't handle 50% of gross just in those taxes without turning to crime to survive and we haven't even touched on the regular tax base to run the government and military, just increased debt service and retirement costs. While corporate tax revenue will show some growth, the bulk of future tax increases will, as usual, be paid by personal income taxes on the graduated basis.

The next time your politicians tell you what something they want to do is going to cost and it doesn't benefit you, it is your money, take out your calculator, run the numbers and start screaming. Or wave the flag and prepare to pay for it. I'd think you younger guys will eventually get tired of that routine.

 

Actually, its 15%. Part of your salary is hidden because your employeer has to contribute the other 7.5%. Its why S corporations are so appealing --- owner pays themself a salary and takes the rest in distributions, free of SS, Medicare, etc. and its taxable at a lower level.

Ford Truck Enthusiasts, Inc.

I fail to see what flag waving has to do with any of this. You can love your nation while still not liking some things about it, though you wouldn't know that if you listened to mainstream media.

 

I agree, i do get tired of hearing that if you "wave the flag" you are bankrupting the nation and are viewed as living for the here and now. I am very proud of my nation and couldn't think of a better country to live in. We have problems and when I find one that affects me I bring it to MY elected officials.

 

It depends on the structure of your business entities. For tax purposes I prefer the LLC electing to file as a sub S. In most states annual LLC filing fees and officer elections are less expensive than C or S corps while providing the same liability shield and tax advantages as the S corp.

Flag waving is merely a reference to going along with whatever politicians say is good for the country without questioning their motives. That's how SS got into the current situation when that trust was busted. And probably how they (politicians) will weasel out of removing the SS tax to keep that revenue stream in the general fund if/when there is no formalized SS.