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Old 03-24-2015, 06:55 AM
 
29,782 posts, read 34,867,277 times
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Quote:
Originally Posted by ringwise View Post
Of course, to some, every landlord is a slumlord.

But to answer your question, they, like other business owners, inject money into the economy and provide a service to folks.
At risk of losing the capital they invested in the process.
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Old 03-24-2015, 08:36 AM
 
4,539 posts, read 4,834,074 times
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Seniors should all be well off unless they have health issues.

Real Estate, Stocks, Long Term bonds pretty much the holy grail of investing was in a lifetime bull market.

Plenty spent too much and plenty left it in cash in savings accounts or low yield CDS or annuitites.

Heck back in the day buy one or two investment properties, a few 30 year munis when rates were 6-12 percent and mix in stock buying in every downturn. Pretty much end of WWII till 1984, 1989 till 2002 and 2008 till 2014 were all very long periods to buy stock. Even in small amounts you be well off.

remember DOW was only like 2k 25 years ago and had a dividend yield of 7-8 percent. Dow today it 18K. Not only would money have grown nine times you would have got 25 years of dividends.

Plus no excuse not to max out 401k, every day of your life.

I had plenty of seniors I told back after that 60 minutes induced panic in Muni bonds in January 2011to buy buy buy as some 30 year investment grade bonds were in the 6-7 percent range. None wanted to do it, one a year later said she was ready, I said well you missed it but it is still at 5% which is good, she said I will wait, a few months ago we talked again and said I will take the 5% but now it is at 3.% the same bonds.

So she had 100K in bank at zero. If she locked in 100K at 6% tax free in January 2011 she would have 24K in interest. Instead she has zero. Seniors also have problem their fear of running out of money causes them to run out of money.

These folks were selling stocks in 2009, selling bonds in 2011 instead of running towards them. And once out of market and in cash inertia sets in and they wait and wait. If Fed does start raising rates next year as planned it would help them, sitting at zero percent interest in bank from 2008 to 2016 is a nightmare.
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Old 03-24-2015, 08:48 AM
 
Location: Tennessee
23,581 posts, read 17,567,761 times
Reputation: 27667
A lot of people seem to be missing the forest for the trees here.

There is the "personal responsibility" crowd which preaches no $5 lattes, no vices, etc. The reference to the drug addicts and alcoholics is really quite telling, as the hardcore drug addicts and alcoholics are unlikely to reach full retirement age anyway. Those people usually die young, so retirement for them is kind of a moot point. Yes, smoking and drinking are expensive, but if you do them at normal levels, it's unlikely to be a significant expense for someone of moderate income or better, probably no more than $5-$10 per day, max. Even if you spend $200-$300 per month on vices, it is a couple of thousand per year. While not trivial, it's not gamebreaking either.

The problem for the "personal responsibility" crowd is that the size of the gulf the truly bad off are facing is not thousands and often not even into the low tens of thousands of dollars, but hundreds of thousands of dollars. This isn't a latte a day problem. This is a major shortfall that would have only been resolved by...more income and more investment.

I think there is probably more truth to the low/stagnating wage argument than most of the others. The median annual household income in my hometown in Tennessee is under $35,000. If half are doing worse than the median, those people are going to be indigent elderly. If a family is only making $30k-$40k, basic subsistence is going to be difficult. Disposable income with which to invest after basic needs are met is probably nearly nothing. The only answer for someone in this position is to earn more. If that person is reaching retirement age and is in this position, the ship has already mostly sailed.

To earn more, people often have to do something uncomfortable, expensive, and often both. If you need to retrain, that costs time, money, and effort, even if the result is worth it on the other end. Relocating - same deal.

People are often frozen by inertia and simply do nothing. Even if the writing is on the wall is clear about the direction something is moving, people often try riding out, hoping for the best, or just bury their heads in the sands, pretending nothing is wrong. This inertia, fear of change, hesitation, whatever you want to call it, keeps people from getting on a better track.

Ending up in a bad situation is often the result of a combination of actions we took that turned out to be poor choices, better choices we could have made in hindsight, but did not make, and circumstances beyond our control.
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Old 03-24-2015, 09:08 AM
 
Location: Tennessee
23,581 posts, read 17,567,761 times
Reputation: 27667
Quote:
Originally Posted by SandyJet View Post
Seniors should all be well off unless they have health issues.

Real Estate, Stocks, Long Term bonds pretty much the holy grail of investing was in a lifetime bull market.

Plenty spent too much and plenty left it in cash in savings accounts or low yield CDS or annuitites.

Heck back in the day buy one or two investment properties, a few 30 year munis when rates were 6-12 percent and mix in stock buying in every downturn. Pretty much end of WWII till 1984, 1989 till 2002 and 2008 till 2014 were all very long periods to buy stock. Even in small amounts you be well off.

remember DOW was only like 2k 25 years ago and had a dividend yield of 7-8 percent. Dow today it 18K. Not only would money have grown nine times you would have got 25 years of dividends.

Plus no excuse not to max out 401k, every day of your life.

I had plenty of seniors I told back after that 60 minutes induced panic in Muni bonds in January 2011to buy buy buy as some 30 year investment grade bonds were in the 6-7 percent range. None wanted to do it, one a year later said she was ready, I said well you missed it but it is still at 5% which is good, she said I will wait, a few months ago we talked again and said I will take the 5% but now it is at 3.% the same bonds.

So she had 100K in bank at zero. If she locked in 100K at 6% tax free in January 2011 she would have 24K in interest. Instead she has zero. Seniors also have problem their fear of running out of money causes them to run out of money.

These folks were selling stocks in 2009, selling bonds in 2011 instead of running towards them. And once out of market and in cash inertia sets in and they wait and wait. If Fed does start raising rates next year as planned it would help them, sitting at zero percent interest in bank from 2008 to 2016 is a nightmare.
I can't tell you how many people I know (mostly boomers, but also older and younger people) threw everything overboard in 2008-2009 and starting heading for the exits of all financial markets. Many of these people cashed out their life savings at or near the trough, ensuring sustained losses and, in many cases, old age penury. Some did it on the fear of a severe depression. While it was stupid to liquidate everything, even at the time, the fear wasn't without basis.

Some either cashed out fully at the bottom or have slowly bled retirement funds to try and stay afloat financially, often servicing some kind of debt with the retirement funds. The problem has several facets:

1) they are out the money they have withdrawn, plus any applicable fees, penalties, and taxes.
2) they have lost out on the market gains they would have made on their original funds, had they done nothing at all.
3) unless they paid off the debt completely and immediately, they are getting heavily taxed and penalized by withdrawing periodically from retirement funds to service something that is interest bearing. They are getting on the in-flow side with the penalties/taxes, and on the out-flow side with the interest.

These people would have honestly been better off going bankrupt, clearing as much debt as possible, and starting over.
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Old 03-24-2015, 12:06 PM
 
12,825 posts, read 20,141,183 times
Reputation: 10910
Quote:
Originally Posted by Emigrations View Post
A lot of people seem to be missing the forest for the trees here.

There is the "personal responsibility" crowd which preaches no $5 lattes, no vices, etc. The reference to the drug addicts and alcoholics is really quite telling, as the hardcore drug addicts and alcoholics are unlikely to reach full retirement age anyway. Those people usually die young, so retirement for them is kind of a moot point. Yes, smoking and drinking are expensive, but if you do them at normal levels, it's unlikely to be a significant expense for someone of moderate income or better, probably no more than $5-$10 per day, max. Even if you spend $200-$300 per month on vices, it is a couple of thousand per year. While not trivial, it's not gamebreaking either.

The problem for the "personal responsibility" crowd is that the size of the gulf the truly bad off are facing is not thousands and often not even into the low tens of thousands of dollars, but hundreds of thousands of dollars. This isn't a latte a day problem. This is a major shortfall that would have only been resolved by...more income and more investment.

I think there is probably more truth to the low/stagnating wage argument than most of the others. The median annual household income in my hometown in Tennessee is under $35,000. If half are doing worse than the median, those people are going to be indigent elderly. If a family is only making $30k-$40k, basic subsistence is going to be difficult. Disposable income with which to invest after basic needs are met is probably nearly nothing. The only answer for someone in this position is to earn more. If that person is reaching retirement age and is in this position, the ship has already mostly sailed.

To earn more, people often have to do something uncomfortable, expensive, and often both. If you need to retrain, that costs time, money, and effort, even if the result is worth it on the other end. Relocating - same deal.

People are often frozen by inertia and simply do nothing. Even if the writing is on the wall is clear about the direction something is moving, people often try riding out, hoping for the best, or just bury their heads in the sands, pretending nothing is wrong. This inertia, fear of change, hesitation, whatever you want to call it, keeps people from getting on a better track.

Ending up in a bad situation is often the result of a combination of actions we took that turned out to be poor choices, better choices we could have made in hindsight, but did not make, and circumstances beyond our control.
Right, there simply are not enough good paying jobs. Sure, there are superstars and sure there are successful small businesses. But come on people, everyone cannot be a superstar or have a successful small business, there simply are not than many opportunities. The fact is, when the typical middle class work is disappearing, guess what? Gulfs of 100s of thousands ensue!

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Old 03-24-2015, 12:11 PM
 
12,825 posts, read 20,141,183 times
Reputation: 10910
Quote:
Originally Posted by TuborgP View Post
I don't necessarily disagree with anything you say. I think there is a counter balance and that is the risk of capital involved in making money and growing a business and how so much is not only made in the process but also lost. Also consider that perhaps just perhaps employee salaries have stagnated but employee compensation is about the same. The increases are in health care and other employee benefits and not as much as salaries. Just providing maternity leave is good but also a employee expense that transfers compensation from salaries to another benefit. Profits rise and fall with the economy yet salaries are difficult to cut during hard times so companies have to layoff which also involves cost. It was only six years ago that just about everyone was losing money. The reality is that the nature of the workforce is changing and in many cases the value of human labor is decreasing. There is a break even point where technology and robotics become cost effective and the need for humans decreases. We have been seeing that over the last decade and as employee cost begin to rise again expect to see more especially in fast foods etc. That is part of the discussion that needs to be had. There are and will not be enough jobs to support the population unless something changes in the long term. Skilled and valuable employees may be starting to be in short supply but human bodies not so much. We talk about 401k matches but remember that corporate profits translates in to 401k profits for those holding them. Share holder profits translates into profits for millions of American citizens , PENSION FUNDS and is sustaining many a retirement now and moving forward. Yes those investments by millions of individuals in stocks and mutual funds involved a risk of capital and we all need only think back a few years and realize how individual capital is at risk being invested. So yes employees share in the wealth but perhaps most importantly shareholders. Shareholders who at personal financial risk provided the capital to grow that company and without that risk of capital how many jobs would there be? So my response to you would be that the success is not as singular as claimed by some but much more broad as experienced by many especially those working to secure that retirement. Unfortunately that part of the story isn't presented in some circles and perhaps if they did more of their supporters would join the wealth creation process.
Corporate profitability is near all time highs, just now.
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Old 03-24-2015, 12:16 PM
 
29,782 posts, read 34,867,277 times
Reputation: 11705
Quote:
Originally Posted by BayAreaHillbilly View Post
Corporate profitability is near all time highs, just now.
And six years ago? And two from now? Yes corporate profits are high and some of the out comes are strong 401/403 equity returns for retirement plans, strong mutual fund returns in our taxable accounts and increased financial sustainability for pension funds and a lowering of the threat to government budgets as a result, yup much better now. Let's hope the corporate environment stays strong as those were ugly times.
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Old 03-24-2015, 12:27 PM
 
Location: New Jersey
12,764 posts, read 7,824,529 times
Reputation: 13083
No offense to the OP, but I find the topic of 'income equality' a rather strange one.

I have always known that there are people who have more money than me and there are those with less money than me.

I'm not sure why that should change in the retirement years.
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Old 03-24-2015, 12:30 PM
 
Location: Denver, CO
9,286 posts, read 5,494,131 times
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The problem with the differences between RETIRED people's income differences and that of just plain income differences is minute. The larger the difference, the greater likelihood of economic and political instability.

From an interview with Bruce Judson, author of Making Capitalism Work for the 99%, A Manifesto, talking about his research into the problem:

Quote:
I was terrified by the similarities between our society and the era of the Great Depression. As a nation, we were moving toward levels of economic inequality we had not seen since the financial crash of the late 1920s. My reading of history, of events surrounding the New Deal era and the Depression, is that excess inequality tended to be associated with high speculation and a lack of appropriate constraints on the financial industry.

In essence, I came to believe growing economic inequality was intimately linked to economic catastrophe, which would be so great that it would tear our social fabric.

BC: Why is inequality so destabilizing and dangerous?
BJ: There are very few things in America that are taboo. But one thing we never, ever talk about is the potential for political instability in the U.S. We're taught as children that we had one great revolution. We take the stability of our democracy for granted.

But economic inequality is very dangerous, and the reason is that in our society wealth and power go together. As wealth becomes substantial, it starts to use its political power to ensure its hegemony and mucks up the important, competitive elements that make capitalism work. Over time, what was formally a vibrant economy with efficient markets becomes an inefficient, dysfunctional one.

Here's a recent example. The New York Times wrote that Wall Street does not want a transparent market for swaps and that Washington politicians were listening to its demands. The reason for the opposition is that, in effect, traders make more money by keeping "prices in the shadows." A transparent market means that you have the equivalent of a stock exchange, where all participants can see the prices of recent trades. That's all it means. It's hard for me to see how this would even be a serious discussion if the financial industry did not have political influence. Is there any public interest in a market that is opaque, rather than transparent?
Bruce Judson on the Societal Dangers of Income Inequality | Next New Deal

Bottom line is that is why the "freeloaders" everyone is concerned about, tend, percentagewise, to be corporations who get the largest share of "tax breaks" and corporate "welfare."

Income inequality is growing in Europe as well. There is no reasonable political way to avoid it, so knuckle down and prepare for another crash and probably the most politically unstable times we've had in well over 200 years.
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Old 03-24-2015, 12:43 PM
 
Location: Idaho
1,454 posts, read 1,155,024 times
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Quote:
Originally Posted by ukgirl49 View Post
Can we just agree that no blame or condescension needs to be attached to all those who are retiring with more limited resources?; equally, not all who are in better circumstances have lived alcohol/ drug free, consistently hard working, and sound decision making lives.
Life is far more nuanced than many of us can willingly accept; it is far more subtle.
As a kindergarten teacher, we teachers talk about the bell curve of ability and achievement. I put equal effort into each child and we are all in the same school environment but the variables already exist before I meet them (nature/ nurture?)
The same bell curve exists through life and into retirement. It was ever so.
It does concern me that generic labels get attached to income groups because it is too simplistic and unsophisticated.
ukgirl49,

I could not have expressed it better myself. I just want to reemphasize your points with examples from my own family.

I come from a big Catholic family with 12 children (only 10 survived to adulthood). One of my mother's favorite sayings is that her children are like the fingers on her hands, there are the long ones and the short ones. She uses that phrase to explain why she appears to favor or being less critical of the less intelligent or capable kids in the family.

For our siblings, it is obvious that there is less of a nurture factor (even though birth order might have played a role). Although we came from the same parental gene pool, the random combination of DNAs and possibly environmental factors yielded a wide range of physical, intellectual, emotional and psychological makeups.

An example of the disparity is one of my sisters being a slow learner. She worked very hard, struggled through schools and had to get doctor's recommendation to take twice as long to complete exams in college (she finally managed to get her B.S. in her late 40's - while working). My youngest brother had a genius IQ and photographic memory (he memorized the entire bird watching book and was able to identify any bird just by a quick glimpse & hearing its song when we took him hiking out west at the age of 8!). He breezed through schools, always graduated the top of the classes and became an MD at the age of 20!

Besides the difference in mental capacities, there are also differences in our siblings' temperaments and/or psychological makeups. One of my sisters is very bright, very studious but emotionally fragile. She managed to get a B.S. but had a hard time holding on to any jobs. She got accepted in a professional health career field but quit after few months for some ridiculous reasons (she spent an entire year taking special courses & studying for the entrance exam!). For years, her siblings included myself got very frustrated with her apparent lack of ambitions, and puzzled by her behavior and life (she is pretty much a recluse, has many phobias and can be labeled as a hypochondriac.) It just dawned on me not too long ago that she could be mildly autistic.

All of us are raised to work hard and to be frugal. As half of us (the older siblings including myself) either has retired or approaching retirement, our economic conditions span almost the entire economic scale. One sibling is at the poverty line, does not own a home, and is still working at the age of 72. Two siblings own their own homes, have modest retirement income and seem to manage OK (being extremely frugal, grow their own foods, shop only at Goodwill etc.). Four siblings are quite wealthy with assets in the multi-millions range. The rest of the siblings are in comfortable or very comfortable middle class income range. For the younger ones who are still in the working ages and don't have a nice saving cushion, all it will take to push them down the economic scale is a layoff, an injury, an unexpected illness or a divorce.

The bottom line that is luck does play a role in our life. It is too simple to attribute our success to our own efforts and/or intelligence and ascribe others' misfortunes to their own doings!

Last edited by BellaDL; 03-24-2015 at 01:08 PM..
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