The End of Retirement (2014)(harpers.org)
harpers.org
The End of Retirement (2014)
https://harpers.org/archive/2014/08/the-end-of-retirement/
343 comments
It's broken for sure, though it's not really anything new. The US is still structurally a slave society, even if we now have the freedom to bounce between plantations (unless your visa is only sponsored by a specific one).
> The US is still structurally a slave society, even if we now have the freedom to bounce between plantations
What makes you say that?
What makes you say that?
The country has never functioned without hordes of cheap, disposable labor that must work into their geriatric years or starve. There is no long-term stability, nor any expectation of it, unless you can become part of the owner class.
its called reality: where people exchange their assets (time,labour) for other assets (food, cars, houses) to benefit from comparative advantages in an almost free market.
If the combined cost of housing, education, retirement, childcare and healthcare amounts to more than any average person can earn during a lifetime, these advantages are in other words never comparative to your investment of time and labor, you could argue that the free market has instituted a form of slavery even if we call it reality. You are after all working under the threat of physical harm if your healthcare depends on employment and we call that violence. Except of course in America where we call it freedom.
None of those expenses are fixed. When people earn more money they spend it on more expensive houses, better education, high quality childcare (read education), and better healthcare. The amount of money you make at minimum wage would fund a nice lifestyle in 1700 - inflation adjusted. The "bathroom" would be an outhouse and a bucked of water you heat on a fire. You wouldn't have even a beat up old car to drive.
There is no visible end in sight to this trend.
There is no visible end in sight to this trend.
Law of Rent and Iron Law of Wages say otherwise.
Read Smith.
Book I, Chapter 8, beginning "There are certain circumstances, however, which sometimes give the labourers an advantage" and through to "The scanty maintenance of the labouring poor, on the other hand, is the natural symptom that things are at a stand, and their starving condition that they are going fast backwards."
https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...
Read Smith.
Book I, Chapter 8, beginning "There are certain circumstances, however, which sometimes give the labourers an advantage" and through to "The scanty maintenance of the labouring poor, on the other hand, is the natural symptom that things are at a stand, and their starving condition that they are going fast backwards."
https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...
The subject does have a lot of complexity that doesn't fit in a comment box. My point stands in general, but it gets complex.
Among the reasons I threw the book at you.
I know, I've read the book, my comment is right out of it.
Housing, food, water, healthcare and so on are scarce because of nature.
If you want to argue that the laws of physics, human physiology and metabolism have conspired to make us all slaves, fine. But you're pushing the word "slave" into territory where it makes no sense.
If you want to argue that the laws of physics, human physiology and metabolism have conspired to make us all slaves, fine. But you're pushing the word "slave" into territory where it makes no sense.
They are scarce, and capitalism makes them more abundant at the cost of subjugation. Humans work endlessly to have access to things that, while scarce, were available in nature for free, often in superior forms. The world no longer supports the lifestyle of our ancestors, so there really is no choice but grind for currency in order to survive. There is evidence that nomadic hunter-gatherers had better nutrition, less disease, less violence, fewer children and "worked" far fewer hours per year than those in the agricultural and industrial eras. By comparison, it's not hard to think of those more modern lifestyles as a form of wage slavery. Work will set you free and all that.
First, comparing capitalism to Auschwitz is obscene. Second, nothing in nature is free. It isn't free for animals today: all of their energy is expended just staying alive. The Rousseauian view of hunter-gathers as living in Eden is nonsense. The death rate for children and mothers was horrifically high until fairly recently. Entire diseases, once deadly or debilitating, have been cured.
If you want to go work on a farm, you can (and I know people who do). You can join some collective living arrangement, you can become Amish, you can live on a kibbutz. You can travel around the country picking up odd jobs and surviving perfectly well because food is so cheap. You're free to do what you like but what you choose to do is whine on the internet because you dislike freedom.
There's plenty of room for improvement in the world. It's sad that people instead babble about "slavery" and "sugjugation," things they know nothing about.
If you want to go work on a farm, you can (and I know people who do). You can join some collective living arrangement, you can become Amish, you can live on a kibbutz. You can travel around the country picking up odd jobs and surviving perfectly well because food is so cheap. You're free to do what you like but what you choose to do is whine on the internet because you dislike freedom.
There's plenty of room for improvement in the world. It's sad that people instead babble about "slavery" and "sugjugation," things they know nothing about.
> First, comparing capitalism to Auschwitz is obscene.
That phrase has been used before and after the holocaust to justify cruelty, but fair enough, it was in bad taste. Any thoughts on the obscenity of sending grandma to work the fields so she can afford her oatmeal?
> Second, nothing in nature is free. It isn't free for animals today: all of their energy is expended just staying alive.
Humans today work harder for their resources than hunter-gatherers did. Something is wrong with that.
> The death rate for children and mothers was horrifically high until fairly recently.
Again, it wasn't as high if you look further back.
> Entire diseases, once deadly or debilitating, have been cured.
One of society's great success, although again, these diseases only really started to spread once we decided to clump together year-round and slave away in the fields.
> It's sad that people instead babble about "slavery" and "sugjugation," things they know nothing about.
Good thing you're here to inform us all about how the people in the article, and forced labor around the world really need to shift their perspective and understand how good they've got it.
That phrase has been used before and after the holocaust to justify cruelty, but fair enough, it was in bad taste. Any thoughts on the obscenity of sending grandma to work the fields so she can afford her oatmeal?
> Second, nothing in nature is free. It isn't free for animals today: all of their energy is expended just staying alive.
Humans today work harder for their resources than hunter-gatherers did. Something is wrong with that.
> The death rate for children and mothers was horrifically high until fairly recently.
Again, it wasn't as high if you look further back.
> Entire diseases, once deadly or debilitating, have been cured.
One of society's great success, although again, these diseases only really started to spread once we decided to clump together year-round and slave away in the fields.
> It's sad that people instead babble about "slavery" and "sugjugation," things they know nothing about.
Good thing you're here to inform us all about how the people in the article, and forced labor around the world really need to shift their perspective and understand how good they've got it.
I thought the whole point of capitalism was to make things cheaper.
I'm not sure if capitalism has a "point" but it almost incontestably has "made things cheaper".
It hasn't altered the fabric of reality to abrograte the laws of physics or human physiology.
It hasn't altered the fabric of reality to abrograte the laws of physics or human physiology.
Calling what the modern day American poor have as 'a form of slavery' is disingenuous. Not being able to afford all of those things is a result of being poor, not of them being subject to 'a form of slavery'.
Well I wasn't referring to the poor specifically. [We can't afford to live anymore](https://aninjusticemag.com/we-cant-afford-to-live-anymore-an...) and there are [good reasons](https://time.com/5888024/50-trillion-income-inequality-ameri...) for that. If you have zero savings by working three honest jobs and is otherwise left to die, you are if not a slave then at least a serf.
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This is neither how the world has always been, nor how it must always be, so it's a bit myopic to call the situation "reality."
The imbalance of power between employee and employer is clearer today than at any point in history. The free market concept of equilibrium is always going to favor the (financially) wealthy, which is not an equilibrium in the sense of equitable balance. Somehow, this is controversial to say here?
I know it may feel like a slave to have to work to live, but it certainly isn't anything like slavery in the antebellum period. It's more akin to the old soviet adage, "So long as the bosses pretend to pay us, we will pretend to work."
The hyperbole bug doesn't do an argument any favors. It's overused today.
The hyperbole bug doesn't do an argument any favors. It's overused today.
The only reason it comes across as hyperbole is because of the US history of antebellum slavery. Sure, we aren't all being held against our will, subject to extreme violence at any time, but the prison system does something pretty close. Many slaves throughout history lived relatively comfortably, and even Frederick Douglass described wage slavery in the US. It's a scary, controversial word, I guess, but the article depicts a pretty scary world for grandma to end up in too, if you ask me.
Something also very common but less discussed is the practice of selling a slave's family members on a whim. Wives, husbands, children, parents sold, never to be seen again. A slave could also be raped, have their spouses and children raped on a whim as well. This was also common. There was also forced breeding.
Having to work at a shitty, thankless job just isn't in the same ballpark.
Having to work at a shitty, thankless job just isn't in the same ballpark.
Yes I've read Frederick Douglass. He lived that version of slavery, but still described wage slavery in writing about working shitty, thankless jobs. There is more than one way to use the word.
Slavery was not employment tho. So even as it was worst, it does not count.
Industrial revolution and aftermath might be better example.
Industrial revolution and aftermath might be better example.
I also live in europe.
My retirement is based on paying ~25% of my gross income into a retirement fund, which is then spent on current retirees, and hoping that in many years, there will be enough people working to be able to pay my retirement.
If you gave europeans those 25% as an extra net pay, there would be a lot more new cars on the road, a bit more savings/investments, and a lot more problems when people get old. "Smart" people would save and invest, and have better "pensions" than they'd have in the current system, and "stupid" people would work until 85yo, and die of hunger.
My retirement is based on paying ~25% of my gross income into a retirement fund, which is then spent on current retirees, and hoping that in many years, there will be enough people working to be able to pay my retirement.
If you gave europeans those 25% as an extra net pay, there would be a lot more new cars on the road, a bit more savings/investments, and a lot more problems when people get old. "Smart" people would save and invest, and have better "pensions" than they'd have in the current system, and "stupid" people would work until 85yo, and die of hunger.
> If you gave europeans those 25% as an extra net pay, there would be a lot more new cars on the road, a bit more savings/investments, and a lot more problems when people get old. "Smart" people would save and invest, and have better "pensions" than they'd have in the current system, and "stupid" people would work until 85yo, and die of hunger.
Exactly, there is an ideology of pushing this kind of issue completely into "personal responsibility" territory which, for me, is frankly a total lack of empathy.
The way it works here in Sweden seems pretty decent to me so far: you get a public pension that you and your employer have paid into the system (of course, it pays the current pensioners) and another part of my pension is put into a pension investment account, that I can operate/manage however I want.
So you get both, a minimum pension sustained by the system paid by current working people and an investment account that I can manage and grow as a portfolio to use during my retirement.
Exactly, there is an ideology of pushing this kind of issue completely into "personal responsibility" territory which, for me, is frankly a total lack of empathy.
The way it works here in Sweden seems pretty decent to me so far: you get a public pension that you and your employer have paid into the system (of course, it pays the current pensioners) and another part of my pension is put into a pension investment account, that I can operate/manage however I want.
So you get both, a minimum pension sustained by the system paid by current working people and an investment account that I can manage and grow as a portfolio to use during my retirement.
>Exactly, there is an ideology of pushing this kind of issue completely into "personal responsibility" territory which, for me, is frankly a total lack of empathy.
It's not a lack of empathy, it's an understanding of the pernicious incentives you are creating with such a system.
I'm being forced to pay over half of my income into a ponzi scheme that i am and will never get anything worthwhile out of. This isn't good for anyone, and it certainly isn't good for the people who are working and providing value and having that value thrown into a raging fire.
This is nothing more than theft from the responsible to the irresponsible, with the associated long term issues.
When you have support these policies you need to understand that they will not and cannot help the people you seek to help.
All that happens is remove the need for people to be responsible and make good financial decisions, for the fact that "the state will save me".
But of course, the state can't, because social security in most countries is no more than very large ponzi schemes, supported by ever growing tax revenues and increasingly high retirement ages. But even that is not enough, in Portugal retirement benefits are expected to fall by half in the next 20 years.
And don't think these pernicious incentives don't exist and that peoples reliance on social security doesn't happen. That quote of "The state will save me" is almost word for word out of the mouth of friends and colleagues, with children and families, who despite being very well paid refuse to save and invest for their retirement, choosing instead to spend what they have today and only rely on social security for their retirement.
These are terrible incentives, and they will and have had predictable results.
It's not a lack of empathy, it's an understanding of the pernicious incentives you are creating with such a system.
I'm being forced to pay over half of my income into a ponzi scheme that i am and will never get anything worthwhile out of. This isn't good for anyone, and it certainly isn't good for the people who are working and providing value and having that value thrown into a raging fire.
This is nothing more than theft from the responsible to the irresponsible, with the associated long term issues.
When you have support these policies you need to understand that they will not and cannot help the people you seek to help.
All that happens is remove the need for people to be responsible and make good financial decisions, for the fact that "the state will save me".
But of course, the state can't, because social security in most countries is no more than very large ponzi schemes, supported by ever growing tax revenues and increasingly high retirement ages. But even that is not enough, in Portugal retirement benefits are expected to fall by half in the next 20 years.
And don't think these pernicious incentives don't exist and that peoples reliance on social security doesn't happen. That quote of "The state will save me" is almost word for word out of the mouth of friends and colleagues, with children and families, who despite being very well paid refuse to save and invest for their retirement, choosing instead to spend what they have today and only rely on social security for their retirement.
These are terrible incentives, and they will and have had predictable results.
> And don't think these pernicious incentives don't exist and that peoples reliance on social security doesn't happen. That quote of "The state will save me" is almost word for word out of the mouth of friends and colleagues, with children and families, who despite being very well paid refuse to save and invest for their retirement, choosing instead to spend what they have today and only rely on social security for their retirement.
Tbh, in the current system (which is bad!), they are the "smart ones".
You have Alice, Bob and Charlie. They all earn the same amount of money.
Alice decides to take a loan and buy a 200k house. Bob stays at home and invests in stocks. Charlie stays at home, and puts the money in a savings account.
10 years go by, alice paid off 100k of the 200k loan, house is still worth 200k, bob has 100k of stocks and Charlie has 100k in the savings account (let's forget about the interest for this example).
They are technically all worth the same, just that their money is in a different form. And then one day, they all lose their jobs.
Alice gets social benefits, one time extra monetary help, loan refinancing and/or even a loan freeze in some cases, Bob gets nothing and is told to sell the stock (even if it's a bad moment to sell), and Charlie gets laughed at the social benefits office, because he has 100k in his account.
This might be our (slovenian) speciality, but the system is made to fuck with people who live responsibly and to always 'save' the people who spend all their money. Also houses are almost literally untouchable, even if you're a single person in a ~1mio city center apartment, and could move to a smaller one a bit further from the center for 150k.
Tbh, in the current system (which is bad!), they are the "smart ones".
You have Alice, Bob and Charlie. They all earn the same amount of money.
Alice decides to take a loan and buy a 200k house. Bob stays at home and invests in stocks. Charlie stays at home, and puts the money in a savings account.
10 years go by, alice paid off 100k of the 200k loan, house is still worth 200k, bob has 100k of stocks and Charlie has 100k in the savings account (let's forget about the interest for this example).
They are technically all worth the same, just that their money is in a different form. And then one day, they all lose their jobs.
Alice gets social benefits, one time extra monetary help, loan refinancing and/or even a loan freeze in some cases, Bob gets nothing and is told to sell the stock (even if it's a bad moment to sell), and Charlie gets laughed at the social benefits office, because he has 100k in his account.
This might be our (slovenian) speciality, but the system is made to fuck with people who live responsibly and to always 'save' the people who spend all their money. Also houses are almost literally untouchable, even if you're a single person in a ~1mio city center apartment, and could move to a smaller one a bit further from the center for 150k.
>they are the "smart ones"
In the U.S. this is often referred to as the "moral hazard". True they may be the 'smart' ones, but I can't help but think there's got to be a system that prioritizes the area of the Venn diagram where "smart" and "moral" overlap.
In the U.S. this is often referred to as the "moral hazard". True they may be the 'smart' ones, but I can't help but think there's got to be a system that prioritizes the area of the Venn diagram where "smart" and "moral" overlap.
I find the concept of "moral hazard" foul when applied to things like retirement provision, social healthcare and social security. It is used a justification to let others rot and starve.
I know that's a common feeling, but I tend to view it as an acknowledgement that we need to understand the behavior being incentivized rather than an actual statement about morals which can be endlessly debated.
There's some irony in the phrasing used to decry the term "moral hazard" though in that it seems to hint of morals itself.
There's some irony in the phrasing used to decry the term "moral hazard" though in that it seems to hint of morals itself.
I think perhaps that's part of my issue with it - "moral hazard" appears to be backwards, it is often used to justify what appear to be very immoral policies and outcomes.
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Alice was about to be made homeless, the others have liquid assets, and clearly have made other arrangements for housing.
I think your example is not really a full picture, and I don't necessarily agree that the state encouraging home-ownership, and helping out home-owners who might be about to lose their home, is wrong.
To my eyes, Alice was living responsibly.
I think your example is not really a full picture, and I don't necessarily agree that the state encouraging home-ownership, and helping out home-owners who might be about to lose their home, is wrong.
To my eyes, Alice was living responsibly.
Yup, both Bob and Charlie "stay at home." Who's home? How is it paid for?
Bob and Charlie are living rent-free in their parents' basements. Alice could have done the same—and will, if she has to sell the house to avoid bankruptcy—but she wanted to appear more independent. Alternatively, she could sell the house, pay off the remaining mortgage, and use the other $100k for rent until conditions improve.
No one in this scenario likely to end up homeless in the near term, as they all have roughly equivalent net worths over $100k. The system just favors those with their assets tied up in housing rather than more diversified investments or liquid savings.
No one in this scenario likely to end up homeless in the near term, as they all have roughly equivalent net worths over $100k. The system just favors those with their assets tied up in housing rather than more diversified investments or liquid savings.
Again, not seeing why it shouldn’t.
By subsidizing home ownership the government is encouraging people to go into debt and funnel whatever savings they manage to scrape together after paying interest into a single depreciating asset rather than a safer, more diversified portfolio. The policy is beneficial to moneylenders and people selling houses, but these things hardly need to be subsidized.
Bob and Charlie are the responsible ones.
Bob and Charlie are the responsible ones.
Alice can sell her house for 200k and have 100k to pay for rent and live off.
The fact that you need to make up such a farcical example to prove your point should tell you something. The fact that you need to hand-wave a decade of wildly different asset classes' appreciation (or depreciation) in order to prove your point should tell you something.
1. Houses aren't particularly liquid, and in a debate about what is "smart" vs. "moral," and the fact that they don't always overlap, you're going to have a hard time arguing for forced eviction from one's primary (only) residence.
2. The 200k house ten years ago is going to be worth a lot more than 200k today. On average you're looking at 290k in a decade.
3. Bob's 100k in stocks would be 217k if he bought it one lump sum and got average returns, so let's say he purchased over time and is sitting around 175k.
4. Charlie's lost money because his 100k is somewhere between 105k and 110k now but he's lost 2-3 times that in purchasing power.
So they are emphatically not worth the same.
Alice owns an illiquid 290k asset for which she's only liable another 100k, so she's +190. She can refinance and lower her payment. She can get loan forbearance because we as a society have decided that it's immoral to immediately kick people out of their homes because they can't pay.
Bob is +75k and there are plenty of ways to make money off of a stock portfolio without liquidating it. You can even get a traditional loan using the portfolio as collateral but you're unlikely to get more than 40-50% of the value given the potential for volatility.
Charlie's lost money and yes, he's going to get laughed out of any assistance office because he's using a savings account - a vehicle designed mainly for emergency funds and short-term savings - for his life savings.
To your last point about the city center apartment, there is a huge difference between a reasonably intelligent person who just lost their job selling their apartment and moving somewhere cheaper, and a bank or government forcing them to do so.
1. Houses aren't particularly liquid, and in a debate about what is "smart" vs. "moral," and the fact that they don't always overlap, you're going to have a hard time arguing for forced eviction from one's primary (only) residence.
2. The 200k house ten years ago is going to be worth a lot more than 200k today. On average you're looking at 290k in a decade.
3. Bob's 100k in stocks would be 217k if he bought it one lump sum and got average returns, so let's say he purchased over time and is sitting around 175k.
4. Charlie's lost money because his 100k is somewhere between 105k and 110k now but he's lost 2-3 times that in purchasing power.
So they are emphatically not worth the same.
Alice owns an illiquid 290k asset for which she's only liable another 100k, so she's +190. She can refinance and lower her payment. She can get loan forbearance because we as a society have decided that it's immoral to immediately kick people out of their homes because they can't pay.
Bob is +75k and there are plenty of ways to make money off of a stock portfolio without liquidating it. You can even get a traditional loan using the portfolio as collateral but you're unlikely to get more than 40-50% of the value given the potential for volatility.
Charlie's lost money and yes, he's going to get laughed out of any assistance office because he's using a savings account - a vehicle designed mainly for emergency funds and short-term savings - for his life savings.
To your last point about the city center apartment, there is a huge difference between a reasonably intelligent person who just lost their job selling their apartment and moving somewhere cheaper, and a bank or government forcing them to do so.
> Also houses are almost literally untouchable,
Often, (in the US) retirement accounts are also sacrosanct, depending on the claim.
The issue of houses reminds me of how much of the US tax system is regressive. Electric car subsidies, special treatment for capital gains, mortgage deductions.
Often, (in the US) retirement accounts are also sacrosanct, depending on the claim.
The issue of houses reminds me of how much of the US tax system is regressive. Electric car subsidies, special treatment for capital gains, mortgage deductions.
The US tax system is designed by people who in theory represent the will of the people, but in reality that are advocating for special interests.
You have things like SALT tax deduction and mortgage interest tax deduction which are directly designed to benefit rich liberals in blue states by subsidizing their oversized government. Take these away and people get mad or move to TX/FL/NV because they actually have to pay their full taxes.
Also having a high state sales tax is much more logical if you don’t want to pay tax just don’t spend money.
It would make much more sense to just do a federal sales tax, totally eliminate the corporate tax as people are paying taxes anyway and it is just a disadvantage to us-domiciled corporations competitiveness, and also totally eliminate fed and state income taxes. Like purge them with fire, there’s way too much complexity and corruption built up over the last hundred years.
Then if you still care about people at the end just institute UBI and Medicare for all to eliminate the billing complexity and potential for discrimination. This policy would also be compatible with open borders and free movement of labor if we as a society decided we want that.
You have things like SALT tax deduction and mortgage interest tax deduction which are directly designed to benefit rich liberals in blue states by subsidizing their oversized government. Take these away and people get mad or move to TX/FL/NV because they actually have to pay their full taxes.
Also having a high state sales tax is much more logical if you don’t want to pay tax just don’t spend money.
It would make much more sense to just do a federal sales tax, totally eliminate the corporate tax as people are paying taxes anyway and it is just a disadvantage to us-domiciled corporations competitiveness, and also totally eliminate fed and state income taxes. Like purge them with fire, there’s way too much complexity and corruption built up over the last hundred years.
Then if you still care about people at the end just institute UBI and Medicare for all to eliminate the billing complexity and potential for discrimination. This policy would also be compatible with open borders and free movement of labor if we as a society decided we want that.
Private retirement accounts are far from untouchable in the EU, though: e.g. Hungary straight-up nationalized private pension funds in 2010 [1].
[1] https://www.ipe.com/nightmare-in-hungary-as-government-natio...
[1] https://www.ipe.com/nightmare-in-hungary-as-government-natio...
The US tax system isn't regressive; I'm against legislating behavior through tax breaks, but calling them subsidies isn't really fair either.
The comment was only about parts of the us tax system. Regressive is a technical term and means that the effective rate decreases as one’s means increase. A simple example is a flat poll tax: richer people feel a much lower burden than poorer people. Mortgage contribution deductions are regressive because poorer people don’t have mortgages on average.
It's also worth noting that the mortgage contribution benefit is capped at a few thousand bucks. It primarily benefits the middle class but is an after thought to millionaires and above. It really doesn't move the needle for them.
> > And don't think these pernicious incentives don't exist and that peoples reliance on social security doesn't happen. That quote of "The state will save me" is almost word for word out of the mouth of friends and colleagues, with children and families, who despite being very well paid refuse to save and invest for their retirement, choosing instead to spend what they have today and only rely on social security for their retirement.
> Tbh, in the current system (which is bad!), they are the "smart ones".
I've had people tell me I'm a fool for saving for retirement, because when the time comes, the people who haven't saved will massively outnumber the people who have, and they will simply vote to fix it. Spend it now on BMWs and fancy vacations because "Our future government will not let 90% of their population starve on the street because they didn't save."
> Tbh, in the current system (which is bad!), they are the "smart ones".
I've had people tell me I'm a fool for saving for retirement, because when the time comes, the people who haven't saved will massively outnumber the people who have, and they will simply vote to fix it. Spend it now on BMWs and fancy vacations because "Our future government will not let 90% of their population starve on the street because they didn't save."
> 10 years go by, alice paid off 100k of the 200k loan, house is still worth 200k, bob has 100k of stocks and Charlie has 100k
If we're talking dollars, then it would be incredibly unwise to save them. The very fact that the fed targets some level of inflation at all makes this incredibly unwise.
Housing would never be worth just 200k 10 years later as long as population is increasing and the dollar inflating.
Stonks are stonks. They're fine, but they don't provide the (at least) two fold benefit of buying a house in American society.
1). You pay a high cost for housing either way--might as well have _some_ of it go toward principal.
2). A mortgage allows you to highly leverage an appreciating asset against a depreciating dollar.
The reliance on the state's pension scheme is also terrifying as the schemes tend to increase (if at all) under the inflation of true cost of living.
All that said, I have a mortgage and stonks and crypto (metals soon), but I'll never hold more dollars than I need for a month (I have credit cards if it really came to it.)
Edit: Why downvote? If you disagree, please say why.
If we're talking dollars, then it would be incredibly unwise to save them. The very fact that the fed targets some level of inflation at all makes this incredibly unwise.
Housing would never be worth just 200k 10 years later as long as population is increasing and the dollar inflating.
Stonks are stonks. They're fine, but they don't provide the (at least) two fold benefit of buying a house in American society.
1). You pay a high cost for housing either way--might as well have _some_ of it go toward principal.
2). A mortgage allows you to highly leverage an appreciating asset against a depreciating dollar.
The reliance on the state's pension scheme is also terrifying as the schemes tend to increase (if at all) under the inflation of true cost of living.
All that said, I have a mortgage and stonks and crypto (metals soon), but I'll never hold more dollars than I need for a month (I have credit cards if it really came to it.)
Edit: Why downvote? If you disagree, please say why.
The general point about cash losing money to inflation is spot on, but:
> Why downvote? If you disagree, please say why.
Sure, so
> Stonks are stonks. They're fine, but they don't provide the (at least) two fold benefit of buying a house in American society.
If you look at averages (across multiple areas, over many decades), you get:
* stonks yield somewhere around 6% above inflation (so 9-10% before inflation).
* houses yield somewhere around 1% above inflation, after including all the other random incentives plus taxes and upkeep costs, (not including multi family rental properties, which is a different matter)
There are localities in which houses do much better (say the bay area), and there are localities in which houses do much worse (Detroit).
But on average, it's a massive opportunity cost vs investing in equities. Which is fine, because there's other benefits to owning a house, like not having to move if someone jacks up your rent.
While we're at it, other reasons for downvotes may include:
> metals soon
These yield also ~1% above inflation
> I'll never hold more dollars than I need for a month (I have credit cards if it really came to it.)
In 2008, the banks slashed my credit to <10% of what it was in 2007. Don't rely on credit cards for emergencies.
Please hold more than 1 month in savings.
> Why downvote? If you disagree, please say why.
Sure, so
> Stonks are stonks. They're fine, but they don't provide the (at least) two fold benefit of buying a house in American society.
If you look at averages (across multiple areas, over many decades), you get:
* stonks yield somewhere around 6% above inflation (so 9-10% before inflation).
* houses yield somewhere around 1% above inflation, after including all the other random incentives plus taxes and upkeep costs, (not including multi family rental properties, which is a different matter)
There are localities in which houses do much better (say the bay area), and there are localities in which houses do much worse (Detroit).
But on average, it's a massive opportunity cost vs investing in equities. Which is fine, because there's other benefits to owning a house, like not having to move if someone jacks up your rent.
While we're at it, other reasons for downvotes may include:
> metals soon
These yield also ~1% above inflation
> I'll never hold more dollars than I need for a month (I have credit cards if it really came to it.)
In 2008, the banks slashed my credit to <10% of what it was in 2007. Don't rely on credit cards for emergencies.
Please hold more than 1 month in savings.
> * houses yield somewhere around 1% above inflation
But buying a house is the only way I can leverage such a massive amount and I have to have housing anyway. It also fixes my housing costs in contrast to renting.
Further, I can sell my house and take gains without paying taxes on the gains. I can't do that with stocks.
> Don't rely on credit cards for emergencies.
I'll also be able to sell metals/stonks/cryptos if need be, but overall I'm just not risk adverse. If I end up selling to get by and lose some, I see that as just making up for what I would have already lost by holding too much cash.
But buying a house is the only way I can leverage such a massive amount and I have to have housing anyway. It also fixes my housing costs in contrast to renting.
Further, I can sell my house and take gains without paying taxes on the gains. I can't do that with stocks.
> Don't rely on credit cards for emergencies.
I'll also be able to sell metals/stonks/cryptos if need be, but overall I'm just not risk adverse. If I end up selling to get by and lose some, I see that as just making up for what I would have already lost by holding too much cash.
I should note that the 90% credit drop also coincided at a time when my investments crashed by 50%+, which would have been an extremely suboptimal time to pull out money. That would have wiped out like 10 years of growth.
I strongly, strongly encourage you to put aside at least 3 to 6 months' worth of expenses outside of risky investments.
I strongly, strongly encourage you to put aside at least 3 to 6 months' worth of expenses outside of risky investments.
To add on to your point, the core issue is that you need to take into account correlated risk when deciding on your investment strategy/risk tolerance.
If you're at the point where you need to dip into an emergency fund, it's possible (maybe even likely) that the entire financial market is burning. You will need access to capital when nobody has access to capital, which will make borrowing very expensive or impossible.
If you're at the point where you need to dip into an emergency fund, it's possible (maybe even likely) that the entire financial market is burning. You will need access to capital when nobody has access to capital, which will make borrowing very expensive or impossible.
The US has unusually high incentives & subsidies for home ownership, so it is a pretty strong contender. More generally though, home ownership vs. renting is not always a clear win. Agree savings accounts are useless these days.
Because an example was given to illustrate a point and you are picking on it in a direction that has nothing to do with the discussion and the example. You took the spirit out of the example and made an analysis of the letters, colors and font - borderline trolling.
Sure, I was just saying to work the system as best you can and describing what I do in the US.
This is correct. Ever since the US allowed consumer banks and commercial banks to merge, savings rate is usually less than a point, if that.
Putting money in a savings account is actually losing value at the rate of inflation - interest. Inflation is usually around 2-3%, interest is a point or less. (last time I checked).
I think the downvote was the comment wasn't entirely relevant to what the OP was trying to demonstrate and might have gotten into the weeds a bit, but I don't know why people downvote. Who knows, it could have been a mis-click. Just say what you want to say, downvotes be damned.
Putting money in a savings account is actually losing value at the rate of inflation - interest. Inflation is usually around 2-3%, interest is a point or less. (last time I checked).
I think the downvote was the comment wasn't entirely relevant to what the OP was trying to demonstrate and might have gotten into the weeds a bit, but I don't know why people downvote. Who knows, it could have been a mis-click. Just say what you want to say, downvotes be damned.
And a typical 30yr mortgage rate is ~3% right now.
https://www.zillow.com/refinance/
> gotten into the weeds a bit
Fair
> downvotes be damned.
Good advice.
https://www.zillow.com/refinance/
> gotten into the weeds a bit
Fair
> downvotes be damned.
Good advice.
Are we not all generating income using the work products of our elders?
None of this happens in a vacuum. Their contributions multiply our income.
If we work with someone on a project, we don't expect them to work for free do we?
Well, look around. The machinery of society was not, and is not free. "Your income" is the product of many people over a sustained amount of time.
Doing it all on your own looks very different.
That said, the only reason pensions are under discussion is the very wealthy take too much value and are not required to help fund the system.
In the US, the cap is something over 100k. Raise that and the funding problem goes away. That cap should be raised because everyone benefits from the labor products and fertile society we live in today.
Those of us who end up with huge benefit and who do not contribute in like kind are literally diluting the future for those to come for arguably self serving in the now. I have no problem with self serving choices either. Work hard, play hard, change the world.
All good.
This is about net good, and talk of ending retirement is talk that completely ignores why we have Social Security and work until we drop is as negative as child labor is.
Some of us may choose to do that. I might!
But to make excuses for what is basically unbridled greed and largess impacting so many other people unnecessarily?
Not all good.
None of this happens in a vacuum. Their contributions multiply our income.
If we work with someone on a project, we don't expect them to work for free do we?
Well, look around. The machinery of society was not, and is not free. "Your income" is the product of many people over a sustained amount of time.
Doing it all on your own looks very different.
That said, the only reason pensions are under discussion is the very wealthy take too much value and are not required to help fund the system.
In the US, the cap is something over 100k. Raise that and the funding problem goes away. That cap should be raised because everyone benefits from the labor products and fertile society we live in today.
Those of us who end up with huge benefit and who do not contribute in like kind are literally diluting the future for those to come for arguably self serving in the now. I have no problem with self serving choices either. Work hard, play hard, change the world.
All good.
This is about net good, and talk of ending retirement is talk that completely ignores why we have Social Security and work until we drop is as negative as child labor is.
Some of us may choose to do that. I might!
But to make excuses for what is basically unbridled greed and largess impacting so many other people unnecessarily?
Not all good.
Don't get distracted by money. Money isn't real. Money does't feed you, or wash your back in hospital. Saving "money" doesn't make anything happen in the future. It only lets you bid on future (then current) labour/production.
The deep problem is we developed expectations and made promises when there were 6 people of working age for every retiree, and the ratio is going to fall to 2-to-1 or worse. Money can't bridge that unless we invent magic ai robots in a hurry.
The deep problem is we developed expectations and made promises when there were 6 people of working age for every retiree, and the ratio is going to fall to 2-to-1 or worse. Money can't bridge that unless we invent magic ai robots in a hurry.
Put another way: we've built all this nice stuff, and we enjoy society and all the things that go with it.
Either we are willing to accept the full cost of that, which means taking care of our own, or we're going to pay hard because of what happens when we don't take care of our own.
So which is it?
Either we are willing to accept the full cost of that, which means taking care of our own, or we're going to pay hard because of what happens when we don't take care of our own.
So which is it?
What will happen is that inflation will cause these promises to be meaningless and throw many elderly into poverty or menial jobs in their old age, hello Walmart greeters...
Getting 1x social security is not going to work when you get rent that is going up 2x as fast. But somehow the market basket of goods will still stay at 2%yoy…
Or we could just start having large families again like some groups (Hasidic Jews, Amish, some Evangelicals) do but I don’t think there’s much political will for that.
Getting 1x social security is not going to work when you get rent that is going up 2x as fast. But somehow the market basket of goods will still stay at 2%yoy…
Or we could just start having large families again like some groups (Hasidic Jews, Amish, some Evangelicals) do but I don’t think there’s much political will for that.
Robots are nowhere close to being any practical replacement for the many basic labors we all depend on.
Just caring for one another is one of those labors and it is significant. Enabling our elders to have income lifted a heavy burden off the middle class. Having enough buying power to support the whole family, whether cohabiting or not was and remains a big deal.
We did that for our parents and their Social Security made a huge difference in how our kids grew up and our overall quality of life.
On a side note, universal health care would have a similar, positive impact on all but very large business.
We are going to need to value things differently.
We can pay people more, have them work fewer hours, allow flex in work time, place, manner.
It simply is not necessary to force everyone to work until they drop.
Again, taking the value out of everything has skewed things toward an artificial scarcity of time. Does not have to be that way.
I do not believe it should be that way.
If we somehow insist, fail to value things in ways that help us live better, the ripple impacts will just cost more.
A whole lot boils down to what we value and why.
Right now, for example, we do not value taking care of our own, instead focusing on money. We do not value basic labors well either.
These two have a serious, negative impact on things like social security, our general ability to compete with other nations and more.
Those basic labors save us doing not so basic labor a ton of time, for example, yet we pay a pittance, shame those performing them, and somehow expect the some 40 some Trillion those people did not take home to pass unnoticed?
We can run the nation leaner than we do, and we should. And those lower numbers mean those doing the labor should live well, seeing as how there is plenty to do.
If we do that, their buying power will grow our economy nicely. Liquid dollars and high demand are good things.
If we raise and or had raised our contribution caps, the program would be running just fine.
If we need to run a deficit on that for a time, so what?
Maybe we can cut back on endless war.
There are enough people, is enough technology to do just fine.
All of this is a priority problem and our priority at present is not well aligned with our people's needs and that can amd should change.
Say we do need more labor.
Fine, make being an American easy again. Plenty of people will step right up and do it.
Bring us your tired, your poor...
Just caring for one another is one of those labors and it is significant. Enabling our elders to have income lifted a heavy burden off the middle class. Having enough buying power to support the whole family, whether cohabiting or not was and remains a big deal.
We did that for our parents and their Social Security made a huge difference in how our kids grew up and our overall quality of life.
On a side note, universal health care would have a similar, positive impact on all but very large business.
We are going to need to value things differently.
We can pay people more, have them work fewer hours, allow flex in work time, place, manner.
It simply is not necessary to force everyone to work until they drop.
Again, taking the value out of everything has skewed things toward an artificial scarcity of time. Does not have to be that way.
I do not believe it should be that way.
If we somehow insist, fail to value things in ways that help us live better, the ripple impacts will just cost more.
A whole lot boils down to what we value and why.
Right now, for example, we do not value taking care of our own, instead focusing on money. We do not value basic labors well either.
These two have a serious, negative impact on things like social security, our general ability to compete with other nations and more.
Those basic labors save us doing not so basic labor a ton of time, for example, yet we pay a pittance, shame those performing them, and somehow expect the some 40 some Trillion those people did not take home to pass unnoticed?
We can run the nation leaner than we do, and we should. And those lower numbers mean those doing the labor should live well, seeing as how there is plenty to do.
If we do that, their buying power will grow our economy nicely. Liquid dollars and high demand are good things.
If we raise and or had raised our contribution caps, the program would be running just fine.
If we need to run a deficit on that for a time, so what?
Maybe we can cut back on endless war.
There are enough people, is enough technology to do just fine.
All of this is a priority problem and our priority at present is not well aligned with our people's needs and that can amd should change.
Say we do need more labor.
Fine, make being an American easy again. Plenty of people will step right up and do it.
Bring us your tired, your poor...
>Robots are nowhere close to being any practical replacement for the many basic labors we all depend on.
That's why I won't be retiring.
That's why I won't be retiring.
Yeah, I may not either. But, whether we have that tech or not is simply not germane.
This is all a priority discussion.
It is not for some real constraint or other.
And simply making that choice for everyone is not necessary, and is poor policy that will cost us a whole lot more than getting our priorities right would.
This is all a priority discussion.
It is not for some real constraint or other.
And simply making that choice for everyone is not necessary, and is poor policy that will cost us a whole lot more than getting our priorities right would.
Where do you think you got your income from? By standing on the shoulders of everyone before you.
> I'm being forced to pay over half of my income into a ponzi scheme
You are making shit up - where in the world does 50% go towards retirement funds?
Unless you are talking about real estate, which is a Ponzi scheme where children pay some of their ancestors for the privilege to own their own land and a home.
> I'm being forced to pay over half of my income into a ponzi scheme
You are making shit up - where in the world does 50% go towards retirement funds?
Unless you are talking about real estate, which is a Ponzi scheme where children pay some of their ancestors for the privilege to own their own land and a home.
> where children pay some of their ancestors
I mean other people’s ancestors (not their own where the wealth is often passed from ancestor to child).
I mean other people’s ancestors (not their own where the wealth is often passed from ancestor to child).
For example, in my country, Argentina, the public pension fund is used to give loans to the Treasury at ridiculous lower interest rates. The government then expends that funds in a lot of short-term public policies.
The problem (atleast in slovenia) is, that you don't get back the amount that you paid in. Eg. you work 40 years, and expect 20 years on pensions (made up numbers, just an example).
If you get an average paycheck, pay 25% of it into the pension for 40 years, you expect to get approximately 50% of the average paycheck at the time of retirement. Well.. you don't (atleast not here). This also presumes, that there are 2x as many workers that pay into the fund, as there are retirees taking out of the fund... which sadly is not the case anymore, and the situation will get worse and worse.
Also, due to many laws and changes, every few years, you get average-paid people retired in eg. 1991 that receive more than the average paycheck in retirement, and newly retired people getting 400eur of retirement (=not enough to survive).
If you get an average paycheck, pay 25% of it into the pension for 40 years, you expect to get approximately 50% of the average paycheck at the time of retirement. Well.. you don't (atleast not here). This also presumes, that there are 2x as many workers that pay into the fund, as there are retirees taking out of the fund... which sadly is not the case anymore, and the situation will get worse and worse.
Also, due to many laws and changes, every few years, you get average-paid people retired in eg. 1991 that receive more than the average paycheck in retirement, and newly retired people getting 400eur of retirement (=not enough to survive).
I know nothing about Slovenia, but my hypothesis is that this is (kind of) by design. Those with good incomes subsidize those with low incomes, and everyone subsidizes those with no income.
The only way to 'earn more' is through a positive return on investment, but pension schemes necessarily must err on the 'safe side'. And currently 'safe' interest rates are negative.
The only way to 'earn more' is through a positive return on investment, but pension schemes necessarily must err on the 'safe side'. And currently 'safe' interest rates are negative.
> Those with good incomes subsidize those with low incomes,
This keeps the average values the same (that's why I used the average example)
> and everyone subsidizes those with no income.
This seems to be an ongoing problem, where we on one side need workers, and on the other side pay unemployment benefits to people who don't want to work. This is then translated to pensions, where people who work only eg. 10 years (instead of 40) get a small pension, but still more than the share they paid into the fund.
This keeps the average values the same (that's why I used the average example)
> and everyone subsidizes those with no income.
This seems to be an ongoing problem, where we on one side need workers, and on the other side pay unemployment benefits to people who don't want to work. This is then translated to pensions, where people who work only eg. 10 years (instead of 40) get a small pension, but still more than the share they paid into the fund.
I consider the subsidization of poor and no-income as the cheapest alternative. Pay them enough to live and the external cost won't be more. Theft, property damage, judicial system and incarceration get lot more expensive than just paying them something. And all the money going to them is anyway spend so on large scale it might not even be net negative.
A sate pension that pays 50% lol that's a big ask. I assume you have your employers pensions as well.
We don't have separate pensions. You pay into the state (~25% of gross income, part is taken from your gross, part is paid by the employer, to get a 'gross-gross' value), and that's your pension.
We have separate saving schemes for pension, where your income tax is deferred until you take the money out (due to progressive tax brackets, your tax percentage will be lower when you're retired, than it is now), but usually employers have nothing to do with that, and with interest lower than inflation, it's just not worth it.
We have separate saving schemes for pension, where your income tax is deferred until you take the money out (due to progressive tax brackets, your tax percentage will be lower when you're retired, than it is now), but usually employers have nothing to do with that, and with interest lower than inflation, it's just not worth it.
> The problem (atleast in slovenia) is, that you don't get back the amount that you paid in. Eg. you work 40 years, and expect 20 years on pensions (made up numbers, just an example).
I don't know you but I never, ever, had the impression I'd get what I paid into any social security system. Neither here in Sweden or even less in Brazil. My salary is just too high compared to the median so I never had the thought that everything I paid into I'd get back as benefits.
And to me, that's ok. I earn quite above the average, I don't mind that I can help fund some part of society with my work if this society is functional and well managed, so in Sweden I'm perfectly fine with this arrangement. In Brazil it was the complete opposite, even though I don't care about paying taxes, I do care about taxes always being stolen by a multitude of corrupt actors in Brazil.
I don't know you but I never, ever, had the impression I'd get what I paid into any social security system. Neither here in Sweden or even less in Brazil. My salary is just too high compared to the median so I never had the thought that everything I paid into I'd get back as benefits.
And to me, that's ok. I earn quite above the average, I don't mind that I can help fund some part of society with my work if this society is functional and well managed, so in Sweden I'm perfectly fine with this arrangement. In Brazil it was the complete opposite, even though I don't care about paying taxes, I do care about taxes always being stolen by a multitude of corrupt actors in Brazil.
You're talking about a different issue (or indeed a non-issue). It's not that high income Slovenians get a lot less out of Slovenian state pensions than they pay in. It's that _everybody_, including low income Slovenians gets a lot less out of it than they contributed. In fact, if Slovenia is anything like Romania, the percentages often work out a lot better for high income contributors.
^yes, this.
I chose the average on purpuse, to do just that. Poor people pay less, and are "subsidized" by the rich, who pay more, but an average person should get as much as they paid in.
Considering that some people die young (before they retire), an average person should get even more than they paid into the system, because the heirs of the dead usually don't get the dead persons pension (with some exceptions, eg. underage kids)
I chose the average on purpuse, to do just that. Poor people pay less, and are "subsidized" by the rich, who pay more, but an average person should get as much as they paid in.
Considering that some people die young (before they retire), an average person should get even more than they paid into the system, because the heirs of the dead usually don't get the dead persons pension (with some exceptions, eg. underage kids)
I guess there's another issue with this equation: avgOUT = avgIN + L
The L(osses) ... the pension/social/levy system - no matter which country we're looking at - appears to have been hijacked by an ever growing parasitic group of financial institutions that milk whatever they can into their private pockets (and their shareholders').
Every penny in fees they receive for "working out" specialized retirement plans is in a way a L(oss) for society. Why? Because no matter what ingenious system a state devises, it all comes back to the fact that the current working/healthy part of the population has to provide for tho elderly and the sick and whoever can't provide for themselves. Every kind of juggling around with the money adding unnecessary steps in between is just milking the system for private gains.
The L(osses) ... the pension/social/levy system - no matter which country we're looking at - appears to have been hijacked by an ever growing parasitic group of financial institutions that milk whatever they can into their private pockets (and their shareholders').
Every penny in fees they receive for "working out" specialized retirement plans is in a way a L(oss) for society. Why? Because no matter what ingenious system a state devises, it all comes back to the fact that the current working/healthy part of the population has to provide for tho elderly and the sick and whoever can't provide for themselves. Every kind of juggling around with the money adding unnecessary steps in between is just milking the system for private gains.
In Poland, by design, now people are paid on average >60% of paycheck while retiring at age 60-65, not taking into account some specific priviledges like for miners.
Meanwhile, people in 20s-30s are projected to get 25% while retiring at close to 70. The system does not make any sense to me.
Meanwhile, people in 20s-30s are projected to get 25% while retiring at close to 70. The system does not make any sense to me.
It's the system that favors the voting majority.
ep103(6)
> The way it works here in Sweden seems pretty decent to me so far: you get a public pension that you and your employer have paid into the system (of course, it pays the current pensioners) and another part of my pension is put into a pension investment account, that I can operate/manage however I want.
> So you get both, a minimum pension sustained by the system paid by current working people and an investment account that I can manage and grow as a portfolio to use during my retirement.
I think the word 'minimum' is going to have totally different implications for those of us working and saving now, compared to the previous generation, that are living on pretty generous pension plans that were wholly publicly-funded, and which our current payments are maintaining.
Also the privatized pension plans in Sweden have been prey both to fraud and high fees. So even though they may give the illusion of future prosperity to those who are trying to save now, that's in no way a guarantee.
I think the word 'minimum' is going to have totally different implications for those of us working and saving now, compared to the previous generation, that are living on pretty generous pension plans that were wholly publicly-funded, and which our current payments are maintaining.
Also the privatized pension plans in Sweden have been prey both to fraud and high fees. So even though they may give the illusion of future prosperity to those who are trying to save now, that's in no way a guarantee.
Yup. On a new defunct blog someone laid out in the comments that here in The Netherlands, if €300 of your wage went to pensions, sometjing like €200 would go to fund current pensioners and of that €200, €60 went to a very select group that got two very beneficial pension arrangements stacked.
Technically all €300 of your contribution goes to fund current pensioners, regardless of how the pension is structured. The idea that you are setting aside money to pay for your own retirement is an illusion. Money is just a proxy for labor, and you cannot transport your own labor into the future to take care of yourself when you are too old to work. In reality, young people must always take care of the elderly, and population decline will be a problem regardless of how much the pension funds have saved up. The question of savings is actually a question of monetary policy: if the flow into the pension fund is greater than the flow out, this creates deflationary pressure (except in whatever assets the fund invests in) and vice versa.
> In reality, young people must always take care of the elderly.
this in and of itself is not a problem in my opinion. The problem is the financial and economic allocation is not going to those in need in society, but those who have amassed massive amount of wealth and use it to create massive hoards of wealth, with a govermental system that makes them to big to fail.
Having massive wealth changes the rules of the game completely. You can legaly dodge taxes if you are wealthy, which creates even more wealth.
People seem to think the labour market and capitalism is like chess, in which makes the right choices can lead to a wealthy life, but for the vast majority this is not the case. Most people are stuck playing poker with very bad bets instead.
this in and of itself is not a problem in my opinion. The problem is the financial and economic allocation is not going to those in need in society, but those who have amassed massive amount of wealth and use it to create massive hoards of wealth, with a govermental system that makes them to big to fail.
Having massive wealth changes the rules of the game completely. You can legaly dodge taxes if you are wealthy, which creates even more wealth.
People seem to think the labour market and capitalism is like chess, in which makes the right choices can lead to a wealthy life, but for the vast majority this is not the case. Most people are stuck playing poker with very bad bets instead.
> you get a public pension that you and your employer have paid into the system (of course, it pays the current pensioners)
In the US we call that Social Security.
In the US we call that Social Security.
people who are poor are usually not stupid.
being poor is also a direct result of onces environment and the social and economic status of their parents.
should we just accept that capitalism punishes the poor for something they have no control over?
I didn't say poor, I said stupid. Some people earning good wages now, would also buy new cars, and be fscked when they get old, and some people earning low wages now, would still invest the 'extra' 25% into something, that'll last until they need it to retire.
...but we do live in a system, that rewards such behaviour, so yeah...
...but we do live in a system, that rewards such behaviour, so yeah...
The poor people's 25% isn't seldom a small small small small fraction of a more wealthy person's 25%.
Low wage workers here (also Europe) can barely save any money (if at all), and have something like at least a 10x increase in disposable income after living expenses from moving in with someone, or getting a well paying senior dev job.
It's not always an individual's actions having this effect, and if you decide to punish or reward based on it you are not rewarding based on morally reasonable metrics.
Low wage workers here (also Europe) can barely save any money (if at all), and have something like at least a 10x increase in disposable income after living expenses from moving in with someone, or getting a well paying senior dev job.
It's not always an individual's actions having this effect, and if you decide to punish or reward based on it you are not rewarding based on morally reasonable metrics.
I live across the street from a homeless camp in California in a house I dont deserve, my parents are amazing people and had no retirement plan and I have no idea whats going on or what Im going to do when Im too old to work and get fired from whatever bs tech company Im working for when Im 35 and Im just realizing it. Its 1:30 in the morning and my babys gonna wake me up in four hours. America is insane.
Giving people more money is not going to increase investments, as the experience here in the United States shows. People just increase their quality of life and live from paycheck to [bigger] paycheck.
Even in the field of software engineering where, one assumes, the employees are of above average intelligence, many are completely oblivious to what is happening in their 401Ks or even if they have one.
Even in the field of software engineering where, one assumes, the employees are of above average intelligence, many are completely oblivious to what is happening in their 401Ks or even if they have one.
A year and a half ago, I would have believed you but I think the data from the stimulus payments in the U.S. shows that a substantial portion of that money went to pay down debt and into savings. I think credit card debt went down something like 14.5% over 2020. Maybe some of this is attributable to the fact there was less availability for experiential spending, but people certainly had availability for buying consumer goods online. And some are expecting the debt to incur faster once the pandemic is fully in the rearview, but it's enough for me to question the strength of my previous conviction that giving people money automatically means they spend it on consumerism.
The jury is still out. Traveling and going out is a massive discretionary spending article, even just from my own experience. There IS a glut of cash on-hand right now, hence all the degenerate gambling in the stock market and crypto, but we will find out how permanent this is, soon enough.
I agree, it remains to be seen how it will play out. But I wonder if the HN lifestyle biases us to the view of how much of an impact it will have. A cursory search showed travel and restaurants are 2.8% and 4.4% of US GDP respectively but I bet if you ask most HN commenters, they'd assume it's much higher.
I have a slightly different view on the stock market piece. I think there's a cohort who are young enough to think the market returns over the last year are the norm, which led them to believe "the market always goes up" and was an easy way to make money. This group tends towards the growth stocks but it seems like they may now be more skittish once they got a taste of a severe market downside
I have a slightly different view on the stock market piece. I think there's a cohort who are young enough to think the market returns over the last year are the norm, which led them to believe "the market always goes up" and was an easy way to make money. This group tends towards the growth stocks but it seems like they may now be more skittish once they got a taste of a severe market downside
> There IS a glut of cash on-hand right now,
For some people. Others still have very little cash.
https://www.bloomberg.com/news/articles/2020-12-10/how-a-k-s...
For some people. Others still have very little cash.
https://www.bloomberg.com/news/articles/2020-12-10/how-a-k-s...
But the stimulus payments were 1 off vs increases in annual salary, which makes it a lot harder to use it towards lifestyle inflation.
Is your perspective that a windfall is less likely to lead to discretionary spending resulting in a paycheck-to-paycheck lifestyle than a salary increase?
I may be wrong, but my previous intuition was that if people have a recurring increased income stream they'd be more likely to save and invest than if it was a one-off.
I may be wrong, but my previous intuition was that if people have a recurring increased income stream they'd be more likely to save and invest than if it was a one-off.
Well of course, but if you want a pension system, you have to take (in our case) 25% of their money now, to be able to give them something back later (or in our case, to give the current pensioners money now, and hope that you'll have someone to take money from, when the current workers retire).
A lot of people want the retirement money 'later', but don't want to pay 'now'.
A lot of people want the retirement money 'later', but don't want to pay 'now'.
> Giving people more money
Taking less money from people...
Taking less money from people...
Every spare dollar I get goes to investments. But I am atypical in that regard.
Username checks out; but seriously, don't over do it. Someday you'll hit financial independence, and you're going to need to have the non-financial aspects of your life (friends, romantic partners, health, hobbies, etc) squared away before you retire.
If you've been neglecting them all your life, it's harder than you'd imagine to repair them.
If you've been neglecting them all your life, it's harder than you'd imagine to repair them.
> there would be a lot more new cars on the road
The current pensionists wouldn't be spending their pension then, so there would be roughly the same "new cars on the road".
The real problem seems to be that poor people's real job in this economy is to be spending their money, and the actual work is just a meaningless trap.
"Smart" and "stupid" poor people generalization is also a disheartening protofascist sentiment.
The current pensionists wouldn't be spending their pension then, so there would be roughly the same "new cars on the road".
The real problem seems to be that poor people's real job in this economy is to be spending their money, and the actual work is just a meaningless trap.
"Smart" and "stupid" poor people generalization is also a disheartening protofascist sentiment.
Pensioners don't buy new cars in Europe. It's an American perspective that elderly are wealthy.
My grampa in Germany was getting his Golf renewed every few years up until he couldn't drive anymore.
I have zero faith the European pension schemes will exist by the time I’m 65 (~30 years). I basically don’t count it towards my retirement planning.
Nobody should have any faith in anything in life that far in advance. You hedge your bets and save anyway even though you can't know if you will live that long, nor if the political reality will allow what currently looks like the best choice will work out that way.
Today in the US the Roth IRA looks like a great investment. I remember when they first came out my dad transfering everything to one even thoguh as he said then "I have to believe they will change the laws and so by the time I retire the tax savings won't happen". So far the laws still make it a good deal, but there is always the risk that the promise gets broken.
Today in the US the Roth IRA looks like a great investment. I remember when they first came out my dad transfering everything to one even thoguh as he said then "I have to believe they will change the laws and so by the time I retire the tax savings won't happen". So far the laws still make it a good deal, but there is always the risk that the promise gets broken.
30 years ago was 1991. In many ways a lot of things have changed since then but if you had put savings then into something reasonably simple like a broad-ranged mutual fund, or a mix of an equity and a fixed income fund, you’d basically be fine. If you had bought a big house it depends on the location. Roth IRAs haven’t been around for 30 years but even if you do have to pay tax, you still get all that compounding happening before this imagined tax. It probably wouldn’t be worse than just having a taxable account and that would be fine anyway.
One other thing to keep in mind is that older people vote more so voting populations skew a lot older than the regular population. I find it hard to imagine such people voting for anything terrible for the old.
One other thing to keep in mind is that older people vote more so voting populations skew a lot older than the regular population. I find it hard to imagine such people voting for anything terrible for the old.
It's simple maths. The pension fund works similar to a ponzi scheme in that it can only sustain itself if there are enough new workers paying in. We have an aging population with massively declining birthrates (inverted population pyramid [1]). Unless the next gen are unbelievably high earning there is no way it can continue.
[1] https://www.worldlifeexpectancy.com/germany-population-pyram...
[1] https://www.worldlifeexpectancy.com/germany-population-pyram...
> The pension fund works similar to a ponzi scheme in that it can only sustain itself if there are enough new workers paying in.
It does not have to be like this. Canada's used to be this way, but several decades ago they saw the problems coming and changed it:
> By the mid-1990s, the 3.6 per cent contribution rate was not sufficient to keep up with Canada's aging population.[10] and it was concluded that the "pay-as-you-go" structure would lead to excessively high contribution rates within 20 years or so, due to Canada's changing demographics, increased life expectancy of Canadians, a changing economy, benefit improvements, and increased usage of disability benefits (all as referenced in the Chief Actuary's study of April 2007, noted above). The same study reports that the reserve fund was expected to run out by 2015. This impending pension crisis sparked an extensive review by the federal and provincial governments in 1996. As a part of the major review process, the federal government actively conducted consultations with the Canadian public to solicit suggestions, recommendations, and proposals on how the CPP could be restructured to achieve sustainability once again. As a direct result of this public consultation process and internal review of the CPP, the following key changes were proposed and jointly approved by the Federal and provincial governments in 1997: […]
* https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_refor...
There were a further update in 2017.
It should be noted that the CPP was never meant to be the sole source of income in retirement, even when it was originally set up. There were provisions for pensions and private savings (RRSPs) as well. The combination of all of these was to fund people's retirement.
It does not have to be like this. Canada's used to be this way, but several decades ago they saw the problems coming and changed it:
> By the mid-1990s, the 3.6 per cent contribution rate was not sufficient to keep up with Canada's aging population.[10] and it was concluded that the "pay-as-you-go" structure would lead to excessively high contribution rates within 20 years or so, due to Canada's changing demographics, increased life expectancy of Canadians, a changing economy, benefit improvements, and increased usage of disability benefits (all as referenced in the Chief Actuary's study of April 2007, noted above). The same study reports that the reserve fund was expected to run out by 2015. This impending pension crisis sparked an extensive review by the federal and provincial governments in 1996. As a part of the major review process, the federal government actively conducted consultations with the Canadian public to solicit suggestions, recommendations, and proposals on how the CPP could be restructured to achieve sustainability once again. As a direct result of this public consultation process and internal review of the CPP, the following key changes were proposed and jointly approved by the Federal and provincial governments in 1997: […]
* https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_refor...
There were a further update in 2017.
It should be noted that the CPP was never meant to be the sole source of income in retirement, even when it was originally set up. There were provisions for pensions and private savings (RRSPs) as well. The combination of all of these was to fund people's retirement.
The simple math is wrong because it doesn't account for the future which might or might not have some other consideration that you don't even know of.
Well yes I kind of eluded to that. It's basically gambling either way but looking at the political situation in Europe I fear any response to changing environments will be reactionary and too little too late.
They take ~19% of my total comp to pay into a ponzi government pension scheme in Germany that will crash in predictable amounts of time, and they have written it into law that existing pensions must never decrease in real terms (!), meaning that every year pension benefits increase, just to make the voting senior population feel secured. It's all at the expense of my generation which gets their salary taken away with nothing tangible in return. The consequence is that I put 75% of my remaining net into investing accounts (completely unprotected and without any tax benefits, just additional capital gains taxes...) and don't spend it on anything else. And then they keep wondering why purchasing power continues to reach all-time lows, and why Germans are unable to accomulate any assest...
The promise of government pension is worthless in Germany (which is different from the pension system of civil servants, btw). The old generation exploits the young and will continue to do so until the system crashes.
The sane thing to do is exit the mandatory contributions schemes.
The promise of government pension is worthless in Germany (which is different from the pension system of civil servants, btw). The old generation exploits the young and will continue to do so until the system crashes.
The sane thing to do is exit the mandatory contributions schemes.
You're on a retirement scheme where current contributions directly pay for current pensions? Wow, I thought those were all dead by now, in favour of retirement funds that are invested.
Of course state pensions are funded from current taxes, so there's always an element of pension payments that come from current tax, but at this point all contribution based pensions should really be investment based. That works much better because the money is pumped directly back into the economy, as investment rather than consumption.
Of course state pensions are funded from current taxes, so there's always an element of pension payments that come from current tax, but at this point all contribution based pensions should really be investment based. That works much better because the money is pumped directly back into the economy, as investment rather than consumption.
> My retirement is based on paying ~25% of my gross income into a retirement fund, which is then spent on current retirees, and hoping that in many years, there will be enough people working to be able to pay my retirement.
This is how most state pensions work, but most supplementary pensions do not (I at least have never heard of them, and I have some experience in different EU countries). They invest your money and grow the amount, and pay you out based on your personal 'investment' or that of your cohort.
Where in Europe do you live if I may ask?
This is how most state pensions work, but most supplementary pensions do not (I at least have never heard of them, and I have some experience in different EU countries). They invest your money and grow the amount, and pay you out based on your personal 'investment' or that of your cohort.
Where in Europe do you live if I may ask?
>hoping that in many years, there will be enough people working to be able to pay my retirement.
No problem. You just import more and more people.
Who supports them? Why...simply import more and more people.
A lot (most?) of the problem is that there are a lot more old people than there used to be and EOL medical problems are more of a thing. Solution? I have no clue.
No problem. You just import more and more people.
Who supports them? Why...simply import more and more people.
A lot (most?) of the problem is that there are a lot more old people than there used to be and EOL medical problems are more of a thing. Solution? I have no clue.
> If you gave europeans those 25% as an extra net pay, there would be a lot more new cars on the road, a bit more savings/investments, and a lot more problems when people get old. "Smart" people would save and invest, and have better "pensions" than they'd have in the current system, and "stupid" people would work until 85yo, and die of hunger.
Part of the problem with giving everyone more money and expecting them to invest it is that it frees up that money for competition for things like better schools (housing in better school districts, private school tuition). You can sacrifice your retirement to give your kids a serious advantage. Tons of people do this, in part because once some start doing it, everyone has to a little or their lives actually get worse than if the money were taken out for retirement before they ever saw it. Then there's the "keeping up with the Joneses" effect which is very hard to entirely resist when the spending-norms for your income-peers are set by people who aren't putting away enough for retirement.
Part of the problem with giving everyone more money and expecting them to invest it is that it frees up that money for competition for things like better schools (housing in better school districts, private school tuition). You can sacrifice your retirement to give your kids a serious advantage. Tons of people do this, in part because once some start doing it, everyone has to a little or their lives actually get worse than if the money were taken out for retirement before they ever saw it. Then there's the "keeping up with the Joneses" effect which is very hard to entirely resist when the spending-norms for your income-peers are set by people who aren't putting away enough for retirement.
I'm curious about the net societal effect of a large fraction of successful people investing in their children's education. From an evolutionary perspective, it makes sense that previous selection would lead to this type of psychology (i.e., selection favors parental investment when it increases fitness, which is particularly true when humans are near carrying capacity, see K-selection). However, this pattern leads to increasing inequity and, historically, societal instability (which would favor R-selection).
if there are no future people working to pay your retirement, then there is no more economy and no more people to sustain whichever alternative "secure investment" you've made. a down economy completely devalues any alternative securities for any "pension funds" or investments, be it rented buildings or stock or other company shares.
not doing a redistributing pension only serves the investment companies selling the illusion of a better private pension.
Switzerland has understood this 20 years ago.
not doing a redistributing pension only serves the investment companies selling the illusion of a better private pension.
Switzerland has understood this 20 years ago.
> "Smart" people would save and invest, and have better "pensions" than they'd have in the current system
Well, if, and only if, their investments have positive gains.
Also you can (depending on the country) pay today extra money into retirements and pension funds which are a kind of financial investments. But good luck figuring out how much of the money goes actually into administering the funds and is deducted from your payment before any investment is made. If these funds were usually an advantageous deal, their conditions would be a lot more transparent.
My take is more or less: Pension is a kind of insurance (you do not know how long you are going to live), so it should be low-risk. If you have extra money, you can invest that - but there is no investment without real risks, so it has to be money which you can really afford to lose.
Well, if, and only if, their investments have positive gains.
Also you can (depending on the country) pay today extra money into retirements and pension funds which are a kind of financial investments. But good luck figuring out how much of the money goes actually into administering the funds and is deducted from your payment before any investment is made. If these funds were usually an advantageous deal, their conditions would be a lot more transparent.
My take is more or less: Pension is a kind of insurance (you do not know how long you are going to live), so it should be low-risk. If you have extra money, you can invest that - but there is no investment without real risks, so it has to be money which you can really afford to lose.
It's not so simple. The money for the retirees is the income of others and if all invest the interest rates go down and you get less money from your investment.
And the current system is safer against a financial crisis.
For some few it's worse than keeping the money and invest themselves but for the society it's much better.
More likely what would happen is that employers would take that 25% for themselves, lowering gross pay so that net pay stays the same. Then every working person would be worse off.
> You can live on that but only barely.
It depends, in Poland the lowest pension is less than 400 usd per month (which is less than 30sqm apartment in cheapest part of Warsaw). It's not enough to survive on unless you own your own accommodation or/and have support from the family.
It depends, in Poland the lowest pension is less than 400 usd per month (which is less than 30sqm apartment in cheapest part of Warsaw). It's not enough to survive on unless you own your own accommodation or/and have support from the family.
>It's not enough to survive on unless you own your own accommodation or/and have support from the family
Which is given for somebody who lived through PRL and got apartment from state or mieszkanie spółdzielcze which they "bought" for 1% of value.
Which is given for somebody who lived through PRL and got apartment from state or mieszkanie spółdzielcze which they "bought" for 1% of value.
Many people want something to change but don't trust the government. They have a point. The govt collects more taxes and then just spends more and is right back to needing more $. Often the money doesn't go to where it's needed because lots of palms need to be greased.
I'll second this. This is mainly a cultural issue.
Lack of social security? Social Security is actually a pretty generous program (it was enhanced several times).
Average monthly payment is $1,544 per person or >$3,000 for a couple.
In Canada the average payment is $736 CAD or $610 USD. Even the maximum payment is Canada ($1200 CAD) is lower the average payment in the US.
https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
https://www.canada.ca/en/services/benefits/publicpensions/cp...
Average monthly payment is $1,544 per person or >$3,000 for a couple.
In Canada the average payment is $736 CAD or $610 USD. Even the maximum payment is Canada ($1200 CAD) is lower the average payment in the US.
https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
https://www.canada.ca/en/services/benefits/publicpensions/cp...
Gov spends 40% of all GDP. That should be plenty to take care of the elderly. Of the entire federal budget almost half goes to the elderly: medicaid/medicaid ~ 20%, social security almost 20%.
the question we should be asking is. Why doesn't all this money go farther than it does? I'd say, we may not be nearly as wealthy as GDP/capita says we are.
the question we should be asking is. Why doesn't all this money go farther than it does? I'd say, we may not be nearly as wealthy as GDP/capita says we are.
> That's a solvable problem. It just requires the will to solve it and for whatever reason that is actually controversial in the US.
i wouldn't assume that's more controversial in the united states than in europe. but if you're assuming public policy responds to what ordinary people want or need, while i don't know about europe, i can say you're confused about how the united states works. the way we've gotten positive change is by being a threat to the minority of the opulent. we're not making much progress now because we've been defanged. the "political divisions" in the united states are just different approaches to coping with that fact.
i wouldn't assume that's more controversial in the united states than in europe. but if you're assuming public policy responds to what ordinary people want or need, while i don't know about europe, i can say you're confused about how the united states works. the way we've gotten positive change is by being a threat to the minority of the opulent. we're not making much progress now because we've been defanged. the "political divisions" in the united states are just different approaches to coping with that fact.
So I'm also European, but we are absolutely not an example to follow here. Our retirements are absolutely in danger, we just haven't collectively realized it yet. I wouldn't be surprised if we fare worse than the US due to other factors.
Every state pension system in Europe is a ponzi scheme nearing the the end of it's lifecycle. Almost all the money going in, is immediately distributed to current retirees and the fund levels are rapidly heading towards 0. Most estimates I've seen indicate that within a decade or 2 (without considerable rises in taxes) social security benefits will be around half what they are now in most of the developed world. The young are being royally screwed and paying into a system that offers them nothing.
The US's social security system has the exact same problem, but the key difference being that a decent percentage of Americans actually have 401k's (~50% i believe) that they've been funding for a long time. Pension plans/401k'like schemes in Europe are far less common and if they do exist they haven't been around anywhere near as long.
What will ultimately happen IMO is that everywhere in the developed world will just start means testing social security. Screwing everyone who saved up anything. We won't have a choice though, as it's the only way to not cripple the economy with exorbitant taxes and avoid large amounts of old frail people living on the street. The problem with Europe is they won't have enough people to screw over this way, and will end up with crippling taxes anyway that will cause more damage overall.
Every state pension system in Europe is a ponzi scheme nearing the the end of it's lifecycle. Almost all the money going in, is immediately distributed to current retirees and the fund levels are rapidly heading towards 0. Most estimates I've seen indicate that within a decade or 2 (without considerable rises in taxes) social security benefits will be around half what they are now in most of the developed world. The young are being royally screwed and paying into a system that offers them nothing.
The US's social security system has the exact same problem, but the key difference being that a decent percentage of Americans actually have 401k's (~50% i believe) that they've been funding for a long time. Pension plans/401k'like schemes in Europe are far less common and if they do exist they haven't been around anywhere near as long.
What will ultimately happen IMO is that everywhere in the developed world will just start means testing social security. Screwing everyone who saved up anything. We won't have a choice though, as it's the only way to not cripple the economy with exorbitant taxes and avoid large amounts of old frail people living on the street. The problem with Europe is they won't have enough people to screw over this way, and will end up with crippling taxes anyway that will cause more damage overall.
mind you that there are far more radical options aswell, like major restructuring of the economic system thanks to climate change.
it seems the current economical system is having more frequent and intense crises which the market cannot solve. Who knows how long the system will be sustainable once more and more of the earths resources are economically unobtainable?
It only takes massive social upheaval to completely change the economic outlook for specific groups of people. A good example of this is the wealth many people amassed in the 20's which they lost thanks to war or revolution during the 30's and 40's.
it seems the current economical system is having more frequent and intense crises which the market cannot solve. Who knows how long the system will be sustainable once more and more of the earths resources are economically unobtainable?
It only takes massive social upheaval to completely change the economic outlook for specific groups of people. A good example of this is the wealth many people amassed in the 20's which they lost thanks to war or revolution during the 30's and 40's.
Zooming out: I think lots of comments suffer from a combination of workcentric view of life and old school puritan values where work is holy and good no matter what. In a true 'smart' society first thing you would do along with your skilled and big headed friends would be to figure out a way to fully automate everything and NOT work... Yes fix the odd broken stuff and help out when is needed, improve and innovate for the sake of optimization/discovery and scientific curiosity, but nothing mandatory to the actual single in order to have basic needs covered, food, housing etc. Money and all the financial system is a lame excuse to keep the status quo and everyone else under its control, with enough computational power you can forecast and implement very nice lifestyle for everyone, the ability to measure and compute nearly everything to a very good degree is something that only recently we achieved and we are not taking full advantage of. Simple example: Japan... too many old people too few to support them, yes we could automate most of the food chain and provide free housing for all of them, but we don't have -fantasy resource x (money)- to accomplish it, this is frankly ridiculous. If you can measure resources and make sure you use them in a reasoned manner you can cover most basic needs for everyone, the reason why it doesn't happen is the heritage of a feudal society who prized violence and subjugation of others and believed in invisible entities that would punish who was against them and/or the established power, and power needed slaves/workers. This was a blink of an eye ago historically.
No joke. Where are the teenagers on HN? This place seems to be full of angst-ridden middle-aged people who decry the lack of backbone and work ethic of the modern man - who cannot imagine not working because they’ve finally hit the peak of their career and are doing so well in middle management!! I mean, I just got a damn raise for shipping that product! I worked hard and so should you god damn it!
Those middle management jobs tend to be the first to go in a downturn.
Alternative view: people worked hard and are now making 400-600k in middle management and are 5-8 years from retirement.
When will we retire this trope? People decrying these hypothetical middle aged cynics and their puritan work ethic seem to outnumber people actually promoting a puritan work ethic 10:1.
Except maybe some deep down comment threads in an article about programming side projects turned business ventures HN does not really favor people working a lot.
Except maybe some deep down comment threads in an article about programming side projects turned business ventures HN does not really favor people working a lot.
>Yes fix the odd broken stuff and help out when is needed, improve and innovate for the sake of optimization/discovery and scientific curiosity, but nothing mandatory to the actual single in order to have basic needs covered, food, housing etc.
Unfortunately, I think this is just a fantasy utopian outlook. Humans have HAD to do things almost their entire existence in order to survive. When you take this away a lot of people fall in to depression. I'm not convinced our minds are able to cope with the option of doing nothing. We currently have to do very little to exist in 1st world countries, at least compared to what we had to do in the past and yet you've got a plethora extremely unhappy individuals. I think the problem is not having to do stuff but having to do things that aren't directly giving you a sense of purpose.
>improve and innovate for the sake of optimization/discovery and scientific curiosity,
Maybe I'm pessimistic but I don't think many people do that just for the sake of curiosity or discovery. They do it because they have to in order to provide for a living or keep themselves and their 'allies' alive. I think you can look at your hobbies and see how you treat them to get a good perspective of how far simple curiosity will take you.
Unfortunately, I think this is just a fantasy utopian outlook. Humans have HAD to do things almost their entire existence in order to survive. When you take this away a lot of people fall in to depression. I'm not convinced our minds are able to cope with the option of doing nothing. We currently have to do very little to exist in 1st world countries, at least compared to what we had to do in the past and yet you've got a plethora extremely unhappy individuals. I think the problem is not having to do stuff but having to do things that aren't directly giving you a sense of purpose.
>improve and innovate for the sake of optimization/discovery and scientific curiosity,
Maybe I'm pessimistic but I don't think many people do that just for the sake of curiosity or discovery. They do it because they have to in order to provide for a living or keep themselves and their 'allies' alive. I think you can look at your hobbies and see how you treat them to get a good perspective of how far simple curiosity will take you.
The pandemic made this crystal clear to me. The phrase "essential worker" is pure comedy.
If like 80% of the population is not an "essential worker" why the fuck do we need to coerce people to work under the threat of eviction, homelessness, and withholding healthcare?
That's why the phrase "essential worker" had to be drastically expanded. To the point of completely destroying any chance of preventing the spread of covid19. Because if we actually took that term at its true meaning, it would destroy these myths that we have about work and the necessity of work. Even containing covid, which we all believed was pretty goddamn important, was not as important as preserving this myth.
We are living in post-scarcity. Which is why everyone except the "essential workers" are so alienated by their work. If you went to college, you're doing yoga and taking prozac to deal with the anxiety of your alienation. If you didn't go to college, you're ODing on fentanyl.
This problem will not go away with more culture and more myth-making.
If like 80% of the population is not an "essential worker" why the fuck do we need to coerce people to work under the threat of eviction, homelessness, and withholding healthcare?
That's why the phrase "essential worker" had to be drastically expanded. To the point of completely destroying any chance of preventing the spread of covid19. Because if we actually took that term at its true meaning, it would destroy these myths that we have about work and the necessity of work. Even containing covid, which we all believed was pretty goddamn important, was not as important as preserving this myth.
We are living in post-scarcity. Which is why everyone except the "essential workers" are so alienated by their work. If you went to college, you're doing yoga and taking prozac to deal with the anxiety of your alienation. If you didn't go to college, you're ODing on fentanyl.
This problem will not go away with more culture and more myth-making.
We're living in a post scarcity world? Really? So if all the people who worked to get food on your plate just stopped it would all be fine? Thats just one example and the list of exchanges required so food just appears in the super market is too long for me to even begin. Take any other product you use and it will be the same. No idea how this is post scarcity, all of this thing called the modern world takes work, it's not magic.
Those people are the essential workers I'm talking about. They are a small portion of the population.
Do you notice how during the pandemic, none of them stopped working? How many do you know personally? And how large that group, the everyone else who stopped working, is?
Do you notice how during the pandemic, none of them stopped working? How many do you know personally? And how large that group, the everyone else who stopped working, is?
> I'm not convinced our minds are able to cope with the option of doing nothing.
You conflate "doing anything" with "working".
A lot of people would be extremely happy partying every other for most of their lives.
> We currently have to do very little to exist in 1st world countries, at least compared to what we had to do in the past and yet you've got a plethora extremely unhappy individuals.
You don't know how strongly those two are correlated and why. I'd claim that a lot of unhappy individuals are such because they have no direction in life and that direction can be a ton of other things who are not paid work.
> Maybe I'm pessimistic but I don't think many people do that just for the sake of curiosity or discovery.
Correct, I'd optimistically say 20% of people would but the cynic in me says 6-7%.
Still, as said above, there are plenty of activities that aren't paid work that are enjoyable. Plus you don't need to have only hobby.
I've known some rich people who have anywhere between 7 to 10 active hobbies at a time and they successfully alternate them to keep themselves busy and engaged.
You conflate "doing anything" with "working".
A lot of people would be extremely happy partying every other for most of their lives.
> We currently have to do very little to exist in 1st world countries, at least compared to what we had to do in the past and yet you've got a plethora extremely unhappy individuals.
You don't know how strongly those two are correlated and why. I'd claim that a lot of unhappy individuals are such because they have no direction in life and that direction can be a ton of other things who are not paid work.
> Maybe I'm pessimistic but I don't think many people do that just for the sake of curiosity or discovery.
Correct, I'd optimistically say 20% of people would but the cynic in me says 6-7%.
Still, as said above, there are plenty of activities that aren't paid work that are enjoyable. Plus you don't need to have only hobby.
I've known some rich people who have anywhere between 7 to 10 active hobbies at a time and they successfully alternate them to keep themselves busy and engaged.
For most of humanity's existence, we were nomadic hunter-gatherers. The majority of what we HAD to do was keep moving. We traded that life for a more predictable food supply during the agricultural "revolution." That was when the back-breaking labor, long hours and slavery really took off.
We might not be good at sitting around doing nothing, but it's the sitting around part that is really the problem.
We might not be good at sitting around doing nothing, but it's the sitting around part that is really the problem.
with enough computational power you can forecast and implement very nice lifestyle for everyone, the ability to measure and compute nearly everything to a very good degree is something that only recently we achieved and we are not taking full advantage of.
This isn't correct. Friedrich Hayek showed (and won a Nobel Prize for it) that this kind of thing is fundamentally uncalculatable. It's not just a matter of scale, it's that important information like how different inputs can be substituted for each other and at what cost are spread across a huge distributed emergent machine. No one entity knows this stuff, or even knows what questions to ask. Heck, even the individuals that are cods in that distributed machine don't even know what logic they're applying.
So throw as much computational power at it as you like, you're still going to wind up with shortages and quality problems if you try to have any centralized agency make these calls.
This isn't correct. Friedrich Hayek showed (and won a Nobel Prize for it) that this kind of thing is fundamentally uncalculatable. It's not just a matter of scale, it's that important information like how different inputs can be substituted for each other and at what cost are spread across a huge distributed emergent machine. No one entity knows this stuff, or even knows what questions to ask. Heck, even the individuals that are cods in that distributed machine don't even know what logic they're applying.
So throw as much computational power at it as you like, you're still going to wind up with shortages and quality problems if you try to have any centralized agency make these calls.
> and won a Nobel Prize for it
In Physics, Chemistry, Physiology or Medicine, Literature, or Peace?
In Physics, Chemistry, Physiology or Medicine, Literature, or Peace?
The comment is that "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1974 " is not really a Nobel prize, as it was not set up by Nobel.
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I didn't know about this (the Nobel prize bit), I've heard the argument in different ways. I find it infuriating that this amazing machine of pricing just gets ignored, taken for granted or worse.
mind you the soviet tried something like this in the early 1980's. Using computers and mathematical models to see where changes where required in the command economy.
This did not work, obviously.
This did not work, obviously.
Francis Spufford's Red Plenty touched on this in some of the vignettes in that book. Fun book to be read as historical fiction set in the USSR.
> Money and all the financial system is a lame excuse to keep the status quo and everyone else under its control, with enough computational power you can forecast and implement very nice lifestyle for everyone, the ability to measure and compute nearly everything to a very good degree is something that only recently we achieved and we are not taking full advantage of.
I'm not following what you mean by this, even after reading your example. I would not trust an algorithm to "forecast and implement" a lifestyle for me. What algorithms exist that currently do this? Are they open source? Who wrote the code, or are they AI/ML driven, and if so, where did the data used to train the algorithms come from? And what does it look like for an algo to implement my lifestyle? (Does my phone send me notifications such as: Time to go get a coffee at Local Cafe #277?)
I also think this doesn't take into consideration how complex peoples' lives are or what people do when they feel some sense of inertia in life and decide to make a change (e.g. find a relationship, get a pet, change habits like diet or exercise, have children).
Another source of confusion for me is that your comment seems to just address the decision-making process, like a sort of AI/ML centrally-planned economy. What about the work of extracting resources and converting to goods/services? Outsourcing the decision-making to automation without outsourcing the work seems like the worst of all possible worlds, the most oppressive solution to organizing society (that I can think of). But, I may have misunderstood what you were getting at here.
Nonetheless, it's an interesting thing to think about.
I'm not following what you mean by this, even after reading your example. I would not trust an algorithm to "forecast and implement" a lifestyle for me. What algorithms exist that currently do this? Are they open source? Who wrote the code, or are they AI/ML driven, and if so, where did the data used to train the algorithms come from? And what does it look like for an algo to implement my lifestyle? (Does my phone send me notifications such as: Time to go get a coffee at Local Cafe #277?)
I also think this doesn't take into consideration how complex peoples' lives are or what people do when they feel some sense of inertia in life and decide to make a change (e.g. find a relationship, get a pet, change habits like diet or exercise, have children).
Another source of confusion for me is that your comment seems to just address the decision-making process, like a sort of AI/ML centrally-planned economy. What about the work of extracting resources and converting to goods/services? Outsourcing the decision-making to automation without outsourcing the work seems like the worst of all possible worlds, the most oppressive solution to organizing society (that I can think of). But, I may have misunderstood what you were getting at here.
Nonetheless, it's an interesting thing to think about.
Conversely, we're nowhere near that yet, so that bit is meaningless. And work is essentially still a means of producing value. As such, it's a heuristic for people's contribution to society and cooperation. Why would we, as a society, wish to incentivize the defectors?
“Retirement” is a recent invention.
Before the last generation or so, the elderly moved into family support roles.
Given that we’re bending over backwards to inflate the wealth of older investors, deflating the buying power of the younger generation in exchange, is enabling retirement a great idea?
It sounds amazing, right? But why must the youth honor the elder generations contracts at their expense?
Why must we “wait” until we can live a free adult life? Just kidding; it’s to prop up the choices of the past as I said.
There are embedded social norms that need a fundamental rethink.
Before the last generation or so, the elderly moved into family support roles.
Given that we’re bending over backwards to inflate the wealth of older investors, deflating the buying power of the younger generation in exchange, is enabling retirement a great idea?
It sounds amazing, right? But why must the youth honor the elder generations contracts at their expense?
Why must we “wait” until we can live a free adult life? Just kidding; it’s to prop up the choices of the past as I said.
There are embedded social norms that need a fundamental rethink.
Having an industry take care of our elderly does free younger generations from elder care responsibilities. It’s not a total loss for the younger generations. Elder care is really hard work.
But I do agree we shouldn’t be subsidizing early retirement so the wealthy elders can go on vacations.
But I do agree we shouldn’t be subsidizing early retirement so the wealthy elders can go on vacations.
Anecdotal, but all my elders who committed to supporting their grand kids; taking them to soccer and such, lived on their own into their 90s.
The ones that died before 80 had turned into hermits, spending their last few months in industrialized care homes.
Being obliged to contribute to communal work may come along with cognitive health benefit.
I don’t have an issue with caretakers being relied on for difficult health reasons. But are we creating health problems through social norms?
The ones that died before 80 had turned into hermits, spending their last few months in industrialized care homes.
Being obliged to contribute to communal work may come along with cognitive health benefit.
I don’t have an issue with caretakers being relied on for difficult health reasons. But are we creating health problems through social norms?
Sometimes you don’t want the grandparents around. There’s a reason many people move out, ya know? The amount of shitty parents that don’t deserve a single thing from their children is massive.
And for that reason, we do need an industry built up around elderly care and facilitating independence from elders.
And for that reason, we do need an industry built up around elderly care and facilitating independence from elders.
Point to where I wrote they had to live with the family?
Who is going to let random old people let them take care of their kids then? Who is going to house them? You’d let random abusive parents take care of your kids and live with you?
you’re all over the map talking about grandparents moving out (which implied to me you meant blood relatives), now you’re on about an social wide norm of random old people.
But since you mention it, I DO have a “random old person” watching my kids right now as I live thousands of miles away from my biological parents for now.
There are daycares being busted for neglect and abuse so industrialization is hardly a solution to the problem of finding the right person.
I’m done with the patronizing attitude. Have a good day.
Edit: yes down vote me for not agreeing with you, and having a reasonable rebuttal. Weird flex, but ydy.
But since you mention it, I DO have a “random old person” watching my kids right now as I live thousands of miles away from my biological parents for now.
There are daycares being busted for neglect and abuse so industrialization is hardly a solution to the problem of finding the right person.
I’m done with the patronizing attitude. Have a good day.
Edit: yes down vote me for not agreeing with you, and having a reasonable rebuttal. Weird flex, but ydy.
Just for reference, you can’t downvote people who reply to you directly. So, it’s not me downvoting you.
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I was shocked to learn recently of the Singaporean legal concept of “parental maintenance” where parents are entitled to financial support from their adult children and can use the court system to enforce payment. Kind of like reverse child support or alimony.
Gross. Is there a way to get out of that legally? That’s a system ripe for abuse from abusive parents. Continue the abuse well past childhood and into adulthood. What a great country.
There simply must be more loving parents than abusive parents?
Parents pay for their kids often well into their 20s. Many of them also help with caring for their grandchildren. Seems just fair to ask for something in return in case of need? There is a similar concept in Germany where you do have to pay part of the nursing home fees if your parents require assistance and can’t live on their own.
Having a child is an informed choice; it's by all objective means a hugely unfair deal yet many people are opting into it for emotional (or hormonal) reasons. Not because they want to materially slave for their kids however, but because they love them and/or want to leave a legacy.
You chose to bring a child into this world. They owe you absolutely nothing for it. They'll help you if they feel love and/or obligation for you, just like I will keep supporting my widowed mother until her death.
But this shouldn't be expected by default -- or legally enforced. It should be a choice. We pay enough taxes as it is, surely the politicians can spare some change to care for our elders.
You chose to bring a child into this world. They owe you absolutely nothing for it. They'll help you if they feel love and/or obligation for you, just like I will keep supporting my widowed mother until her death.
But this shouldn't be expected by default -- or legally enforced. It should be a choice. We pay enough taxes as it is, surely the politicians can spare some change to care for our elders.
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Literally were all working to keep the system going while they print money to inflate assets held by old people.
Agreed, but your tone implies that you won't be an old person one day.
Beach real estate only massively inflates in california once, BTC only goes from .1 c to 50k once. These are once in a multigenerational outcomes for asset classes that we will be paying for, for decades. I will spend my 30s and 40s making in the top 1-3%, but still making just enough to afford a nice home in a nice area, with a wife that doesn't work, multiple kids, and nice things. Things people used to take for granted. Not the bare minimum lifestyle, but one would expect more from being so high up on the income totem pole.
It feels to me like I am working to keep the monetary policy afloat.
It feels to me like I am working to keep the monetary policy afloat.
You still can if you invest and then move out when you're 40 and a solid multimillionaire. Also, a not working wife isn't an "asset" but a huge liability: an equivalent of an earthquake leveling your house followed by a recession halving your assets and a major health issue that wastes half of your income.
hahah.... well yes there is that as well. A potential 50% loss of basically lifetime savings
> Things people used to take for granted.
All of that was possible mostly due to a confluence of a few major things that happened at the right time - WW2 leaving US at a competitive advantage, people having lots of kids ensuring lots of economic growth, and automation and outsourcing multiplying productivity and keeping costs low, but at a slow enough pace that people could transition to better economic opportunities and a lot of the people being left behind were masked by sheer population growth since a lot of younger people were still moving up on the ladder.
And no automation was developed to turn people over in the hospital beds or change their bedpans or clean bathrooms.
All of that was possible mostly due to a confluence of a few major things that happened at the right time - WW2 leaving US at a competitive advantage, people having lots of kids ensuring lots of economic growth, and automation and outsourcing multiplying productivity and keeping costs low, but at a slow enough pace that people could transition to better economic opportunities and a lot of the people being left behind were masked by sheer population growth since a lot of younger people were still moving up on the ladder.
And no automation was developed to turn people over in the hospital beds or change their bedpans or clean bathrooms.
Older investors are a modest fraction of the older generation. A world where the young renounce the old is a world where the old renounce the young.
Social Security is a sham. That's making people live poorer after retirement. Many of them don't receive anything close to the money they earned while they were working. That's not the case if they had invested the same money in a 401K. It's absolutely terrible that old people are living worse than they would have had if the government hadn't forced them to dump their money in the dumpster fire that is Social Security.
[1] https://taxfoundation.org/comparing-returns-tax-favored-reti...
[1] https://taxfoundation.org/comparing-returns-tax-favored-reti...
Something to think about is whether guaranteeing automatic monthly play money for investors to gamble on the stock market has been good for society.
The existence of 401ks have a lot of unintended consequences, and is ultimately not guaranteed.
The existence of 401ks have a lot of unintended consequences, and is ultimately not guaranteed.
There is no risk-free value generation. And in order to provide future "social security" - you need future value generation.
Furthermore it's a little bit of an oversimplification to say that the market is just gambling. It allows the innovators to realize a gain from the value they generate, which gives them the capital to innovate again, while non-innovative investors take over during the capitalization phase (when the business actually generates profit). The entrepreneurs have no interest in that phase since it offers the least amount of growth and their expertise is in the innovation phase.
So yes, in aggregate... it has been good for society. It provides a quicker turnaround for innovators to innovate. And since innovation leads to growth, it's also a good way to secure people's retirement future.
Furthermore it's a little bit of an oversimplification to say that the market is just gambling. It allows the innovators to realize a gain from the value they generate, which gives them the capital to innovate again, while non-innovative investors take over during the capitalization phase (when the business actually generates profit). The entrepreneurs have no interest in that phase since it offers the least amount of growth and their expertise is in the innovation phase.
So yes, in aggregate... it has been good for society. It provides a quicker turnaround for innovators to innovate. And since innovation leads to growth, it's also a good way to secure people's retirement future.
social security goes far beyond just a pension system. things like housing, healthcare and social support for the less fortunate in society all fall under social security.
the current pension system in most of the world is just not scalable because people getting older and the birth rate declining, but this does not mean that money couldn't be sourced from elsewhere. in most countries today, workers contribute the majority of the pension for the current retired generation.
mind you the free market also does not have a solution for this problem, except to tell poor people or disabled people to be poor or keep working until they drop dead.
the current pension system in most of the world is just not scalable because people getting older and the birth rate declining, but this does not mean that money couldn't be sourced from elsewhere. in most countries today, workers contribute the majority of the pension for the current retired generation.
mind you the free market also does not have a solution for this problem, except to tell poor people or disabled people to be poor or keep working until they drop dead.
> the current pension system in most of the world is just not scalable because people getting older and the birth rate declining,
Is does scale in this situation: simply increase the retirement ages properly such that always at least roughly "inflow of money = outflow of money" holds. The problem rather is that there is no political will to do that.
Is does scale in this situation: simply increase the retirement ages properly such that always at least roughly "inflow of money = outflow of money" holds. The problem rather is that there is no political will to do that.
And somehow important thing that has been forgotten is that you can't pay out more than has been paid in. On average for generation. Too bad boomers are the entitled generation and ruined it for their children. They talk about their contributions, but I see no hard numbers if they have truly paid in as much is being paid out.
At the risk of sounding butthurt, it's kind of strange and unfair to claim that "boomers are the entitled generation." They merely happen to have been born at a time when the social and economic situation for future generation changed due to changes in ecology, world economy, and in this case the demographic of industrialized countries.
By the way, the changes have been going on for much longer. When I was young we were called "Generation X" and newspapers told us that we were going to be the first generation much poorer than their parents, with "patchwork CVs" and a "decline of traditional work opportunities." Overall, these predictions turned out to be true. So I guess we could call our parents the "entitled generation." After all, the Club of Rome warned in 1972 that economic growth was not sustainable but the warnings did not lead to major changes of the socio-economic systems, although many smaller positive changes were made.
By the way, the changes have been going on for much longer. When I was young we were called "Generation X" and newspapers told us that we were going to be the first generation much poorer than their parents, with "patchwork CVs" and a "decline of traditional work opportunities." Overall, these predictions turned out to be true. So I guess we could call our parents the "entitled generation." After all, the Club of Rome warned in 1972 that economic growth was not sustainable but the warnings did not lead to major changes of the socio-economic systems, although many smaller positive changes were made.
> At the risk of sounding butthurt, it's kind of strange and unfair to claim that "boomers are the entitled generation." They merely happen to have been born at a time when the social and economic situation for future generation changed due to changes in ecology, world economy, and in this case the demographic of industrialized countries.
Also, it is good to remember that the "boomer generation" is a mainly american phenomenon. Most other western countries had a period of rebuilding after world war 2, which was not a time of economic prosperity.
A good example of this is the late 1940'and 50's. American's wealth grew quite a bit during this time. Most (western) european countries had wage freezes, a corve system or even rationing during that time.
Western european economic power started to increase in the late 1950's and early 1960's. (wirtschaftswunder etc)
Ofcourse, eastern europe was far worse off considering the lack of marshall aid and heavy restructuring of the economy to a soviet style command economy.
Also, it is good to remember that the "boomer generation" is a mainly american phenomenon. Most other western countries had a period of rebuilding after world war 2, which was not a time of economic prosperity.
A good example of this is the late 1940'and 50's. American's wealth grew quite a bit during this time. Most (western) european countries had wage freezes, a corve system or even rationing during that time.
Western european economic power started to increase in the late 1950's and early 1960's. (wirtschaftswunder etc)
Ofcourse, eastern europe was far worse off considering the lack of marshall aid and heavy restructuring of the economy to a soviet style command economy.
And in some instances US SS is more generous than the "socialistic" UK.
Single persons unemployment benefit
Single persons unemployment benefit
the UK is considering one of the most liberal economies in europe with very little if no state involvement of the economy.
Most of this happened after thatcherism ofcourse.
Most of this happened after thatcherism ofcourse.
People can afford those things with the cash that the market generates for them. And the free market solution to "the problem" is higher economic prosperity of society and thus fewer people in poverty. There is no other answer.
If you think current retirees have it bad, wait until it’s our turn. I’d be extremely surprised if the currently working generation will be getting any pension at all (in every country that has such a system) and if the retirement age to draw a pension isn’t raised to a ridiculous age. The amounts we pay in now for the most part are used to pay for current retirees, not to accumulate for our retirement. It’s a major problem everywhere which is further exacerbated with the fact that it takes more working people than retirees to support the system and that’s not the way it’s currently going. I’m privileged enough that I can save and invest significant amounts of money that I’ll actually be able to afford retiring and just see my mandatory contributions as lost/cost of doing business but that’s far from universal. Most people don’t think about retirement/can’t save anything and hope it will all work out. It probably won’t.
Could be. But one thing that was pointed out to me is that once our generation gets closer to retirement age, the governments will be more willing to address our concerns. Probably at the price of making the next generation's retirement plans even more dubious.
The change in attitude is due to the fact that older people are more likely to vote and that politicians and their friends also tend to be in the past-middle age-but-not-retired-yet age bracket.
The change in attitude is due to the fact that older people are more likely to vote and that politicians and their friends also tend to be in the past-middle age-but-not-retired-yet age bracket.
Sounds like a Ponzi scheme
Governments already don't care about current retirees, why would they care about us? Old voters currently vote by the left/right side already and not by "who gives me more" (atleast in my small EU country, and many others).
Extremely different in my country, Poland.
Humans have this amazing tendency to wait until the last minute to implement much more constraining solutions at the last minute than what would have been necessary if we did it in time. To wit: climate change. We’ve known about it for 40–50 years but only now are we seriously considering what we can start doing so that in ten years we actually start doing it, right before all hell breaks loose.
> I can save and invest significant amounts of money
Saving/Investing has become harder as time goes on. I heard about how my grand parents' parents could put their money in the bank or something and compound interest would take care of things. Now with 0% interest everywhere, people rush to gamble in stocks or real-estate. As time goes on, it becomes harder to even hold the values of what you have.
Saving/Investing has become harder as time goes on. I heard about how my grand parents' parents could put their money in the bank or something and compound interest would take care of things. Now with 0% interest everywhere, people rush to gamble in stocks or real-estate. As time goes on, it becomes harder to even hold the values of what you have.
> Saving/Investing has become harder as time goes on. I heard about how my grand parents' parents
Yeah that’s for sure. All these stories about people who were cashiers or factory workers and who bought their houses… Not happening anymore.
You can invest in index funds and it seems to be the only way to keep up, unless you know what you’re doing and can pick stocks (you and 99.99% of the people on the planet can’t)
Yeah that’s for sure. All these stories about people who were cashiers or factory workers and who bought their houses… Not happening anymore.
You can invest in index funds and it seems to be the only way to keep up, unless you know what you’re doing and can pick stocks (you and 99.99% of the people on the planet can’t)
I’m not even sure about index funds. If you put money in at the bottom of the market last March, that money has almost doubled while we are still in the middle of a pandemic.
I put some money into my vanguard Roth IRA and I can not pay almost double for an index fund this year than what I paid last year.
Am I irrational?
I put some money into my vanguard Roth IRA and I can not pay almost double for an index fund this year than what I paid last year.
Am I irrational?
> Am I irrational?
Time will tell. But over the last 100 years you would not have come out ahead unless you are close to retirement already.
Time will tell. But over the last 100 years you would not have come out ahead unless you are close to retirement already.
What are you referring to here? Assuming s&p500, I've calculated an average of 10% increase over any 10 year interval (of course not ending in a crash).
If you’re playing the long game, I would say it doesn’t really matter. It might crash soon but recover by the time you actually need it or it will keep going until you need it. Since these indices represent the whole market and it tanks, you won’t be worse off than most other investors/funds/pensions either way. That’s how I see it.
But I’d you’re looking for a shirt term gain then it’s very different.
But I’d you’re looking for a shirt term gain then it’s very different.
That's how I look at it as well. And if it tanks and never recovers, then it seems to me that would also mean society has completely collapsed and there really isn't much any individual could do about it anyway.
I'm unsure of what you're trying to say here. Are you implying that you're not able to buy the same # of shares of an index fund as you were last year?
WRT the market doubling, there has been a lot of different reasons for it, QE increasing money supply that has been plowed into the stock market inflating values, top performers generally doing better relatively to society, and higher income individuals and families generally weathering the pandemic much better than low-income individuals and families.
This is all to say that market performance is not tied to the pandemic in any particular way (in this case). Back to your other statement of not being able to purchase the same # of shares (if that was your point), it doesn't matter the # of shares you can buy per year, only the value of shares purchasable. The thread above you isn't calculating the # of shares increasing by 5% year, just the value of total shares . I care that the total value of my investments increases because that's what eventually matters when I start withdrawing, the # of shares I have could increase, but that wouldn't matter if the total value stays the same or decreases.
WRT the market doubling, there has been a lot of different reasons for it, QE increasing money supply that has been plowed into the stock market inflating values, top performers generally doing better relatively to society, and higher income individuals and families generally weathering the pandemic much better than low-income individuals and families.
This is all to say that market performance is not tied to the pandemic in any particular way (in this case). Back to your other statement of not being able to purchase the same # of shares (if that was your point), it doesn't matter the # of shares you can buy per year, only the value of shares purchasable. The thread above you isn't calculating the # of shares increasing by 5% year, just the value of total shares . I care that the total value of my investments increases because that's what eventually matters when I start withdrawing, the # of shares I have could increase, but that wouldn't matter if the total value stays the same or decreases.
> Yeah that’s for sure. All these stories about people who were cashiers or factory workers and who bought their houses… Not happening anymore.
i also don't think that situation was a realistic mean to begin with. The one time in history where this was possible was in the US straight after world war two. A period when th e rest of the industrial world was blown to smithereens.
For most of the world, that period did not happen. For instance, my grandparents had substantial less wealth then my parents (who where born in the late 60's)
i also don't think that situation was a realistic mean to begin with. The one time in history where this was possible was in the US straight after world war two. A period when th e rest of the industrial world was blown to smithereens.
For most of the world, that period did not happen. For instance, my grandparents had substantial less wealth then my parents (who where born in the late 60's)
When interest rates were high in the 1980s my Grandmother and her brother bought a house by purchasing savings bonds. She worked part time and already owned two houses. It was much easier as far as I can tell.
On the flip side, my Grandpa made a decent living as a press-brake operator. My grandma was incredibly frugal as well, reusing the same transformers themed ziplock bags for almost twenty years and hanging her paper towels under the sink to re-use for later.
On the flip side, my Grandpa made a decent living as a press-brake operator. My grandma was incredibly frugal as well, reusing the same transformers themed ziplock bags for almost twenty years and hanging her paper towels under the sink to re-use for later.
I am planing my retirement as if Social Security is not going to be there. Of course, it will be there - in some form - but not nearly at a level where I just won't have to think about money, which is my goal.
> Many of them don’t receive anything close to the money they earned while they were working. That’s not the case if they had invested the same money in a 401K.
Yes, it can be. It’s not on average the case if they had invested the money in a 401K, but social security is not designed as a primary retirment system but as a safety net one.
Yes, it can be. It’s not on average the case if they had invested the money in a 401K, but social security is not designed as a primary retirment system but as a safety net one.
Sure, and the 401K would be a better safety net. If the government opened up a 401K account for every retiring person, the result would be better.
If they invested the money in a 401k instead, the social security taxes would still go to current retirees by bidding up inflated asset prices. Building more cars in 1990 does not cause there to be more total nursing care in 2020, all your proposal does is change how retiree income is distributed.
I'm not saying the switch is going to be pretty, I'm just saying that the math is in favor of the 401k.
My home country allowed you to have a mix of private savings (but only certain government bonds) and Social Security. When Social Security imploded, the government just expropriated the private systems "for the greater good" and "redistributing wealth".
Funny how democracy works.
Funny how democracy works.
> That's not the case if they had invested the same money in a 401K.
The unquestioned assumption that the stock market is a source of infinite growth is both foolish and, for anyone that thinks about it honestly, very likely to be wrong.
Even if we completely disregard the fact that limitless growth is impossible on a finite planet, and that we are daily seeing more and more cases where we are brushing against our limits, the very nature of 401ks is a pretty ridiculous way to build a retirement for a society.
Putting your retirement into a 401k means that your retirement is based on the future success of the economy. Typically what you would want for retirement would be some sort of investment structure where the economy doing worse when you are older will not impact your quality of life.
But instead we have set it up so that if the economy does poorly then, aside from all the normal problems of a bad economy, suddenly an entire generation of people will lose their safety net right away.
Like so many aspects of our society, we've let irrational optimism allow us to be highly leveraged in many ways, such that small bumps along the way have the potential to drive the entire system into utter catastrophe. The fact that we respond to these small bumps today by even further leveraging ourselves means this disastrous end becomes increasingly likely.
The unquestioned assumption that the stock market is a source of infinite growth is both foolish and, for anyone that thinks about it honestly, very likely to be wrong.
Even if we completely disregard the fact that limitless growth is impossible on a finite planet, and that we are daily seeing more and more cases where we are brushing against our limits, the very nature of 401ks is a pretty ridiculous way to build a retirement for a society.
Putting your retirement into a 401k means that your retirement is based on the future success of the economy. Typically what you would want for retirement would be some sort of investment structure where the economy doing worse when you are older will not impact your quality of life.
But instead we have set it up so that if the economy does poorly then, aside from all the normal problems of a bad economy, suddenly an entire generation of people will lose their safety net right away.
Like so many aspects of our society, we've let irrational optimism allow us to be highly leveraged in many ways, such that small bumps along the way have the potential to drive the entire system into utter catastrophe. The fact that we respond to these small bumps today by even further leveraging ourselves means this disastrous end becomes increasingly likely.
Growth is the result of value generation. One of the ways to generate value is through technological innovation, which leads to higher economic growth. At the end of the day, you're saying that technological innovation is not infinite. I suppose you're right, but if we reach the point where we've hid the limit of technological innovation. I think the theory on technological growth is that it is in fact infinite and we'll reach a point when it's uncontrollable and irreversible. It's referred to as a technological singularity.
If we've reached that point, then I'm pretty sure retirements won't matter.
If we've reached that point, then I'm pretty sure retirements won't matter.
Generally I feel like retirement used to mean "I'm too old and frail to work anymore", until that brief blip between 1950-2010, give or take a decade or two.
It was a pretty cool idea that you could just stop working and enjoy life and its luxuries while still having a good few decades of quality life ahead of you. I believe this is really hitting Japan hard, as the age pyramid is inverted, and the relatively few working-age people need to support enormous numbers of people enjoying retirement.
It was a pretty cool idea that you could just stop working and enjoy life and its luxuries while still having a good few decades of quality life ahead of you. I believe this is really hitting Japan hard, as the age pyramid is inverted, and the relatively few working-age people need to support enormous numbers of people enjoying retirement.
Isn't it going to hit all western countries hard? Seems to me Japan is just first in the list...
As far I'm concerned, I'm living in Europe and I'm not confident at all that I'll get any retirement before my 70. Knowing that the lifespan increased a lot but not necessary the good-shape-span, it seems to me a better strategy is to enjoy more free time now by reducing work hours than to bet on an uncertain future.
As far I'm concerned, I'm living in Europe and I'm not confident at all that I'll get any retirement before my 70. Knowing that the lifespan increased a lot but not necessary the good-shape-span, it seems to me a better strategy is to enjoy more free time now by reducing work hours than to bet on an uncertain future.
> it seems to me a better strategy is to enjoy more free time now by reducing work hours than to bet on an uncertain future
I've always thought this way, uncertainty or not. Why wait until you're old and frail to enjoy life?
I've always put the matched contribution into my retirement accounts, because it's free money, but no more than that. The rest of my savings go into places where I don't have to wait until my life is nearly over to access them.
I've always thought this way, uncertainty or not. Why wait until you're old and frail to enjoy life?
I've always put the matched contribution into my retirement accounts, because it's free money, but no more than that. The rest of my savings go into places where I don't have to wait until my life is nearly over to access them.
It's not about delaying enjoyment to old age but to be sure to have basic needs met and some comfort when old.
Investing for retirement for me is a hedge against being old, infirm and still having to work just to survive and live with stress and anxiety.
You should do the math on how much you'll likely actually have in retirement, and see how you feel about it, before it's too late to change your strategy.
I put almost 20% of my net salary in to my pension, and my employer another 8%, and it's still unlikely that I'll be able to retire particularly early or will live a particularly comfortable life in retirement. For one thing, if I'm still renting when I retire I'll likely be barely scraping by.
Doing the math can be a shock.
You should do the math on how much you'll likely actually have in retirement, and see how you feel about it, before it's too late to change your strategy.
I put almost 20% of my net salary in to my pension, and my employer another 8%, and it's still unlikely that I'll be able to retire particularly early or will live a particularly comfortable life in retirement. For one thing, if I'm still renting when I retire I'll likely be barely scraping by.
Doing the math can be a shock.
Maybe I should actually do the math; I guess I just assumed that with the full matching contributions on what should be decent 401k's, I should already be getting set up for that "basic comfort, not having to worry about working to survive" baseline. Not that I'm burning the rest of the money I make.
My basic view is that I don't want to be rich when I'm old so that I can make "dream purchases" or live on a cruise ship for the rest of my days or whatever; I want to be living comfortably and fully for my whole life.
My basic view is that I don't want to be rich when I'm old so that I can make "dream purchases" or live on a cruise ship for the rest of my days or whatever; I want to be living comfortably and fully for my whole life.
The basic rule of thumb advocated is to assume a 3-4% safe withdrawal rate in retirement.
So for example, if you want a $30,000/yr (inflation adjusted) income in retirement you need to save yourself a $1M (inflation adjusted) pot. Over a 30 year career with a 5% (real, above inflation) investment return that takes $1,200/month.
Lots of people think saving a couple of hundred bucks per month will leave them super comfortable. The math tells the scary reality.
So for example, if you want a $30,000/yr (inflation adjusted) income in retirement you need to save yourself a $1M (inflation adjusted) pot. Over a 30 year career with a 5% (real, above inflation) investment return that takes $1,200/month.
Lots of people think saving a couple of hundred bucks per month will leave them super comfortable. The math tells the scary reality.
I have this "fun" slider on my retirement account's website that shows different values for different retirement ages. In order to hit my minimum, I had to slide it all the way to age 85. "FUN"
The match is different for everyone, as is timeframe. If at 20 you put in 10000 per year for 10 years and nothing at 65 you will have more than someone who starting at 30 put in 10000 every year. However in the real world you start out after college with less income, student loans, and needing to get a place to live so few do this. That doesn't even get into inflation which is also a factor.
Math:
- 1 unit/mo for 10 years at 7%/yr => 172 units.
- 172 units @ 7%/yr for 35 years => 1,836 units
vs.
- 1 unit/mo for 35 years at 7%/yr => 1,721 units
Depends on rates though who comes out in front.
- 1 unit/mo for 10 years at 7%/yr => 172 units.
- 172 units @ 7%/yr for 35 years => 1,836 units
vs.
- 1 unit/mo for 35 years at 7%/yr => 1,721 units
Depends on rates though who comes out in front.
>For one thing, if I'm still renting when I retire I'll likely be barely scraping by.
Maybe some of that 28% should be put towards property?
I'm pretty sure that cases where mortgage is more expensive than renting through 30+ years are very, very rare.
Maybe some of that 28% should be put towards property?
I'm pretty sure that cases where mortgage is more expensive than renting through 30+ years are very, very rare.
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> I'm living in Europe and...
>... enjoy more free time now by reducing work hours than to bet on an uncertain future.
Unknowingly or not, you've just echoed a chapter in Peter Thiel's book Zero to One with such perfect clarity, Mr Thiel may start to look like a savant.
>... enjoy more free time now by reducing work hours than to bet on an uncertain future.
Unknowingly or not, you've just echoed a chapter in Peter Thiel's book Zero to One with such perfect clarity, Mr Thiel may start to look like a savant.
It will probably hit them (as well as other Asian countries like South Korea) harder because they have not had the same levels of immigration to buffer the demographic change like in the west. Overall things have just gotten increasingly uncertain and insecure throughout the developed world, retirement at 65 is probably a pipe dream for most millennials.
Isn't increasing automation supposed to fix that? Having machines do more and more of the work for us.
Maybe, but machines also don't really pay taxes or into social security as well, at least not yet.
As automation increases, workforce transitions to more service-oriented professions that are more difficult to automate
thats not a given, especially for low skill paying jobs
I'd extend that to many high-paying jobs as well. Professions that are researched-based, like law, may be easily displaced by automation.
Currently, my thought is that skilled trades are the least likely to be displaced, especially in maintenance, non-routine roles. There's currently a decent amount of research to automate the routine parts, though, like new construction.
Currently, my thought is that skilled trades are the least likely to be displaced, especially in maintenance, non-routine roles. There's currently a decent amount of research to automate the routine parts, though, like new construction.
> Having machines do more and more of the work for us.
Automation often does not reduce the requirement for labor, it only shifts the work and cost somewhere else.
Automation often does not reduce the requirement for labor, it only shifts the work and cost somewhere else.
Sometimes, “somewhere else” is upward on the value chain and is thus an improvement.
Former plowshare-pullers become horse-steerers become tractor drivers. Each new invention does have it’s attendant complications, but they tend to be nicer than the basic, first job. Ie, I’d rather be a tractor mechanic than a plowshare puller.
I’m glossing over generations of social upheaval and re-skilling here, but that’s the pattern so far.
Former plowshare-pullers become horse-steerers become tractor drivers. Each new invention does have it’s attendant complications, but they tend to be nicer than the basic, first job. Ie, I’d rather be a tractor mechanic than a plowshare puller.
I’m glossing over generations of social upheaval and re-skilling here, but that’s the pattern so far.
Most people trade automation for a better lifestyle. In 600 even though between then and now we went from 95% of females needing to spend 14 hours per DAY spinning raw material into thread to machines automating all that work. In 600 95% males spent their time farming. Now we have machines to make thread and so very few females even know how to make thread and most that do it is just something for fun. We have machines to farm and so only a tiny number of people are farmers.
Despite all that there is still a lot of work to do. There wouldn't have to be, most of the work being done is something we could skip if we decided to let science/society stagnate at current levels. Most people have decided they want more.
Despite all that there is still a lot of work to do. There wouldn't have to be, most of the work being done is something we could skip if we decided to let science/society stagnate at current levels. Most people have decided they want more.
Japan seems to have abandoned that strategy in favour of attracting migrant workers from SE Asia. At least that's the impression I got when I last visited the Tokyo Regional Immigration Bureau. Makes sense given how reliant the country still is on manual labour. They even hire people to walk you past roadworks when a physical sign alone would do just fine.
> I'm not confident at all that I'll get any retirement before my 70
Where I am(also EU), retirment is at 75 and already talks about raising it to 79, because lifespan increased, funds are in strains etc. I wonder if I will live up to that age to retire or it'll again shift several times, as the way world is changing with climate change and everything, life will probably be very different and expensive.
Where I am(also EU), retirment is at 75 and already talks about raising it to 79, because lifespan increased, funds are in strains etc. I wonder if I will live up to that age to retire or it'll again shift several times, as the way world is changing with climate change and everything, life will probably be very different and expensive.
Which country is this? I was not able to identify it via googling.
I do not know of any EU country with the retirement age over 70. Was it recently moved to those ages or did you mean 65 and 69?
It is very strange, because I indeed remember it raised(there were news and criticism/opinion pieces everywhere) in 2015 to 75. However, now I checked wikipedia, it shows 65(+- few months).
May be my memory is holding onto a proposal that didn't pass or something. I apologize for the misinformation.
May be my memory is holding onto a proposal that didn't pass or something. I apologize for the misinformation.
That's the storytelling people keep repeating. That is not what is actually happening. Or at least, population is not getting older as fast as it's made to be and is not the biggest factor.
For instance, France have, successfully, bet on immigration. But the public discourse being what it is, since the population was getting older supposedly, we are now lacking in schools and universities because we chose to not build or/and renovate infrastructures. So now we have a real education problem for instance.
But the real problem with state pension fund in France is not that the population is getting older, the reality is that companies are simply not paying their due.
With all sort of tax credit and exemption, various French government chose to artificially lower salaries for all employees. Most of them are not even aware as this is not treated on the case by case but globally at company level.
The aim/excuse (depends on your political color) is to fight unemployment. The side effect, is that the state pension fund id depleting slowly but irremediably. On the other hand, to be fair, if you have massive unemployment, money is not entering the state pension fund either.
But the population getting older is a trick politician love to use to not have explain complicated issues and arbitrations made in depth. The lazy way out IMO.
For instance, France have, successfully, bet on immigration. But the public discourse being what it is, since the population was getting older supposedly, we are now lacking in schools and universities because we chose to not build or/and renovate infrastructures. So now we have a real education problem for instance.
But the real problem with state pension fund in France is not that the population is getting older, the reality is that companies are simply not paying their due.
With all sort of tax credit and exemption, various French government chose to artificially lower salaries for all employees. Most of them are not even aware as this is not treated on the case by case but globally at company level.
The aim/excuse (depends on your political color) is to fight unemployment. The side effect, is that the state pension fund id depleting slowly but irremediably. On the other hand, to be fair, if you have massive unemployment, money is not entering the state pension fund either.
But the population getting older is a trick politician love to use to not have explain complicated issues and arbitrations made in depth. The lazy way out IMO.
Pay as you go vs fully funded makes little difference - consumption goods such as nursing care cannot be carried over from one period to another. Unless France is going to use the depleted pension fund as an excuse to cut benefits, being underfunded only makes a difference in terms of whether the next generation of workers transfers goods to retirees in the form of taxes or pension fund contributions.
> Unless France is going to use the depleted pension fund as an excuse to cut benefits
That is exactly what has been happening several times during the last 3 decades.
That is exactly what has been happening several times during the last 3 decades.
> Generally I feel like retirement used to mean "I'm too old and frail to work anymore", until that brief blip between 1950-2010, give or take a decade or two.
The question I'd have is why should the welfare state prioritize able-bodied workers just because they hit a fixed chronological age?
I can definitely understand social security (which is essentially a welfare program) existing to support those who are too frail, infirm, or sick to work. Which would disproportionately fall upon the aged. But if somebody turns 65 and still capable healthy and capable of working (as many 65 year olds are in this day and age), why is the public budget subsidizing that person's leisure?
I also understand the value of retirement as a time in later life to reflect and relax. And if this is valuable to someone they should take the personal initiative to save and invest to fund their retirement. But it doesn't seem like the purview of the welfare state to subsidize this lifestyle. The government doesn't subsidize vacations, gap years, and other types of "reflective leisure time". The purpose of the welfare state is to protect people in the most dire straits, not to make sure everybody's living the most fulfilling life possible.
Heck, I can even understand advocating for UBI, which would give everyone a fallback option to not working. But it simply makes no sense that we essentially have UBI for able-bodied workers who are 65, but not those who are 35.
The question I'd have is why should the welfare state prioritize able-bodied workers just because they hit a fixed chronological age?
I can definitely understand social security (which is essentially a welfare program) existing to support those who are too frail, infirm, or sick to work. Which would disproportionately fall upon the aged. But if somebody turns 65 and still capable healthy and capable of working (as many 65 year olds are in this day and age), why is the public budget subsidizing that person's leisure?
I also understand the value of retirement as a time in later life to reflect and relax. And if this is valuable to someone they should take the personal initiative to save and invest to fund their retirement. But it doesn't seem like the purview of the welfare state to subsidize this lifestyle. The government doesn't subsidize vacations, gap years, and other types of "reflective leisure time". The purpose of the welfare state is to protect people in the most dire straits, not to make sure everybody's living the most fulfilling life possible.
Heck, I can even understand advocating for UBI, which would give everyone a fallback option to not working. But it simply makes no sense that we essentially have UBI for able-bodied workers who are 65, but not those who are 35.
> welfare state prioritize able-bodied workers just because they hit a fixed chronological age?
There exists a need to support the old and frail. Chronological age is an easier metric to use than to leave value judgements up to whoever is going to be determining if someone qualifies.
It's also money that I as a taxpayer put into the system and will get ~70% of my contributions back. Your welfare state is my government forced retirement plan with negative returns.
There exists a need to support the old and frail. Chronological age is an easier metric to use than to leave value judgements up to whoever is going to be determining if someone qualifies.
It's also money that I as a taxpayer put into the system and will get ~70% of my contributions back. Your welfare state is my government forced retirement plan with negative returns.
Nation state social security systems are not financial investments with returns, they are insurance. What are the returns on your homeowners and auto insurance?
How can you tell if someone is actually too old and frail to work rather than just pretending, especially with invisible issues like chronic pain? It's easier just to declare a retirement age.
>But it simply makes no sense that we essentially have UBI for able-bodied workers who are 65, but not those who are 35.
Someone who is 65 most likely has already paid their contributions to society. Compare how Norway and the Gulf states distribute their oil wealth. Norway reinvests it and only hands it out to those of retirement age. Meanwhile, Saudi Arabia and Kuwait meanwhile guarantee a job where you don't even have to show up, which basically is the same as UBI. As a result, thesr nations are completely dependent on foreign labor.
https://www.bloomberg.com/news/articles/2018-06-20/workers-p...
>But it simply makes no sense that we essentially have UBI for able-bodied workers who are 65, but not those who are 35.
Someone who is 65 most likely has already paid their contributions to society. Compare how Norway and the Gulf states distribute their oil wealth. Norway reinvests it and only hands it out to those of retirement age. Meanwhile, Saudi Arabia and Kuwait meanwhile guarantee a job where you don't even have to show up, which basically is the same as UBI. As a result, thesr nations are completely dependent on foreign labor.
https://www.bloomberg.com/news/articles/2018-06-20/workers-p...
> It's easier just to declare a retirement age.
I think that's a fair argument. But 65 is probably way too young as a threshold in this day and age. I happen to know a lot of 65-ish Americans, because that's right around my parents' age. And the vast majority of them are still capable of working.
Which isn't to say that they're not enjoying retirement. But they most certainly don't need to be retired. I'm happy for them if they can support themselves. But I don't think public finances need to subsidize healthy people's cross-country RV trips.
I think that's a fair argument. But 65 is probably way too young as a threshold in this day and age. I happen to know a lot of 65-ish Americans, because that's right around my parents' age. And the vast majority of them are still capable of working.
Which isn't to say that they're not enjoying retirement. But they most certainly don't need to be retired. I'm happy for them if they can support themselves. But I don't think public finances need to subsidize healthy people's cross-country RV trips.
But should your life be dedicated to work forever while you’re able bodied? What about having some fun while you’re still able to? Most people in the US don’t even take vacations like those in software do. I don’t think my own parents have left the country in 30 years. The only reason they ever left was due to military service. Otherwise, they could never afford it anyway.
UBI is interesting but it’d never scale to the same level as social security benefits. Many people in the US live off of just social security and maybe a tiny bit of retirement funds.
If you gave out social security to everyone, we’d have a massive amount of people quitting work (potentially forever). Wouldn’t like be financially sustainable unless we overhaul the entire system and have extremely straight forward taxation without deductions, special treatment, different brackets for different types of income, etc.
UBI is interesting but it’d never scale to the same level as social security benefits. Many people in the US live off of just social security and maybe a tiny bit of retirement funds.
If you gave out social security to everyone, we’d have a massive amount of people quitting work (potentially forever). Wouldn’t like be financially sustainable unless we overhaul the entire system and have extremely straight forward taxation without deductions, special treatment, different brackets for different types of income, etc.
In your mind people should work until every last drop of productivity is squeezed out of them?
Retirement/social security is the carrot: "work hard until you reach age xx and then you can relax." Some people need a reason to keep going, and society needs those people to keep working for most of their life, or institutions will collapse.
Yes, some people enjoy their jobs, or are motivated by moving up to a better job or more pay, but the reality is there are many people for whom these will never be possibilities. They do jobs that are not fun or rewarding, that can be performed by nearly anyone so will never be forced by the market to pay more than minimum wage.
It used to be the motivation for these jobs was the stick, but we've progressed, and now offer a carrot instead.
Yes, some people enjoy their jobs, or are motivated by moving up to a better job or more pay, but the reality is there are many people for whom these will never be possibilities. They do jobs that are not fun or rewarding, that can be performed by nearly anyone so will never be forced by the market to pay more than minimum wage.
It used to be the motivation for these jobs was the stick, but we've progressed, and now offer a carrot instead.
(2014)
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Most of the big traps society sets up is built on top of loss aversion.
The chimp brain is unreasonably terrified of loosing status, cash, relationships, health, housing etc etc. That fear is used to setup all kinds of traps to keep the chimp in chains.
So lot of people have got trapped in costly social/professional status arm races, multiple alimony/child support payments, multiple mortgages, endless credit card bills etc etc etc.
If you want to retire. Know the traps. Avoid the traps - https://thedecisionlab.com/biases/loss-aversion/
The world is not static. More people understand the weaknesses of their own brain the less things can stay the same.
The chimp brain is unreasonably terrified of loosing status, cash, relationships, health, housing etc etc. That fear is used to setup all kinds of traps to keep the chimp in chains.
So lot of people have got trapped in costly social/professional status arm races, multiple alimony/child support payments, multiple mortgages, endless credit card bills etc etc etc.
If you want to retire. Know the traps. Avoid the traps - https://thedecisionlab.com/biases/loss-aversion/
The world is not static. More people understand the weaknesses of their own brain the less things can stay the same.
Human is weird. On one hand, they hate loss.
On the other hand, they are so vulnerable to gamble-alike activities, which make the minority rich and majority poor, which always drastic decrease of the happiness in total (because those who gain money are slightly happier but those who lose money suffer).
On the other hand, they are so vulnerable to gamble-alike activities, which make the minority rich and majority poor, which always drastic decrease of the happiness in total (because those who gain money are slightly happier but those who lose money suffer).
Pensions would be funded by everyone including me, "but I can gamble better than you"
Loss aversion is perfectly reasonable. Being indifferent to losses makes sense in a world of risk, where costs are known and chances repeat, and where a cushion exists large enough to catch you. (this is the video game like world of the upper-middle class where everyone gets 10 shots)
But most of us don't live in a world of risk, we live in a world of uncertainty, and people who make decisions under uncertainty have to consider that loss isn't that good if you lose so hard that you're dead (literally or metaphorically), or you don't get to see the payoff.
The chimp brain is the way it is for a reason, if the tiger gets you that's it, doesn't matter how tasty the fruits on the tree are.
But most of us don't live in a world of risk, we live in a world of uncertainty, and people who make decisions under uncertainty have to consider that loss isn't that good if you lose so hard that you're dead (literally or metaphorically), or you don't get to see the payoff.
The chimp brain is the way it is for a reason, if the tiger gets you that's it, doesn't matter how tasty the fruits on the tree are.
>Loss aversion is perfectly reasonable.
Is your claim that the disproportionate level of aversion is reasonable? It's my understanding this is the actual heart of the claim, not simply "people don't like losing things" but rather "people hate losing things even more than they like gaining the same thing."
Related: the endowment effect. "The endowment theory can be defined as "an application of prospect theory positing that loss aversion associated with ownership explains observed exchange asymmetries."[1]. The asymmetries as evidence that it is actually not reasonable/rational.
[1]https://en.wikipedia.org/wiki/Endowment_effect
Is your claim that the disproportionate level of aversion is reasonable? It's my understanding this is the actual heart of the claim, not simply "people don't like losing things" but rather "people hate losing things even more than they like gaining the same thing."
Related: the endowment effect. "The endowment theory can be defined as "an application of prospect theory positing that loss aversion associated with ownership explains observed exchange asymmetries."[1]. The asymmetries as evidence that it is actually not reasonable/rational.
[1]https://en.wikipedia.org/wiki/Endowment_effect
Tempered loss aversion is the better way to approach things when there is no upper limit to winning, but the lower limit to losing is getting kicked out of the game. It's why "the house always wins" is true even for fair casino games.
The hard part is getting the right balance.
The hard part is getting the right balance.
Wow. This speaks to me. What led you down thinking that it's ok to downgrade all aspects of social status and comforts? I know some friends that are routinely starting from zero again and again. One of them is having some remorseful on not building anything lasting, like having kids or long term building on a single career
I think a start is getting to a point where your well-being isn't primarily based on social status and comforts. Stoicism and Buddhism have a lot to say on this but much of it is counter to American cultural norms.
You make "comforts" sound like a sin that we should not pursue but I am here to tell you that I'd be much healthier if I lived in a house by the beach and not in the middle of a noisy city with dirty air and barely any nature around.
Would that include your definition of a "comfort"? Namely simply not wanting to live in a place that's slowly killing you?
I think the "comforts" idea sounds cool at first -- hey, look at me, I gave up my earthly desires, I am enlightened! -- until you squint your eyes and recognize that most of us are living in conditions that, again, are literally slowly killing us.
Wanting to avoid that is not "comfort". It should be a fundamental human right but what can you do, that's not the world we live in.
Apologies if I projected. Not attacking you, just explained which neurons got triggered in my head.
Would that include your definition of a "comfort"? Namely simply not wanting to live in a place that's slowly killing you?
I think the "comforts" idea sounds cool at first -- hey, look at me, I gave up my earthly desires, I am enlightened! -- until you squint your eyes and recognize that most of us are living in conditions that, again, are literally slowly killing us.
Wanting to avoid that is not "comfort". It should be a fundamental human right but what can you do, that's not the world we live in.
Apologies if I projected. Not attacking you, just explained which neurons got triggered in my head.
>Apologies if I projected. Not attacking you, just explained which neurons got triggered in my head.
No worries, and I probably didn’t take the time to explain my perspective better.
I don’t think any comforts are “bad”, assuming they aren’t built upon oppressing someone else. And there’s nothing wrong in my view with pursuing them. But there’s a needle to thread between pursuing comforts and needing comforts to be happy. The hedonic treadmill really seems to limit the latter.
There’s nothing wrong in pursuing good nutrition as an example, but I don’t want to be the person who can’t enjoy a good meal because I can’t ensure every ingredient is organic. The obsession with comforts can pull us out of the present because it’s rooted in subjective comparison.
Avoiding discomfort as a primarily goal doesn’t seem particularly healthy to me. Avoiding intense exercise because it’s discomforting or avoiding tough choices regarding climate change because they are uncomfortable don’t seem to me as particularly enlightened.
No worries, and I probably didn’t take the time to explain my perspective better.
I don’t think any comforts are “bad”, assuming they aren’t built upon oppressing someone else. And there’s nothing wrong in my view with pursuing them. But there’s a needle to thread between pursuing comforts and needing comforts to be happy. The hedonic treadmill really seems to limit the latter.
There’s nothing wrong in pursuing good nutrition as an example, but I don’t want to be the person who can’t enjoy a good meal because I can’t ensure every ingredient is organic. The obsession with comforts can pull us out of the present because it’s rooted in subjective comparison.
Avoiding discomfort as a primarily goal doesn’t seem particularly healthy to me. Avoiding intense exercise because it’s discomforting or avoiding tough choices regarding climate change because they are uncomfortable don’t seem to me as particularly enlightened.
> The hedonic treadmill really seems to limit the latter.
We're in a full agreement.
But I really do mean things that with time I started to consider basic needs. Hedonism I don't endorse in general -- or at least, as you said, not when it's at the expense of someone else. If you made your money fairly and without screwing over others then sure, splurge as much as you like.
We're in a full agreement.
But I really do mean things that with time I started to consider basic needs. Hedonism I don't endorse in general -- or at least, as you said, not when it's at the expense of someone else. If you made your money fairly and without screwing over others then sure, splurge as much as you like.
Cruelty without end. Billions are made off crashes, like the one in '08, that sink people into poverty exactly when they can't afford it. Billions more are made off their continued labor. But if one of these grandmas picked up a gun and shot someone on wall street, they'd be hauled away in an instant. Law and order.
That's what Law and Order means. What you really want is the Rule of Law, but that's something the upper echelons don't like much.
Billions are lost in crashes as well... There are a number of billionaires and hundred-millionaires who were undone in 2008. It's not like they all got richer and everyone else got poorer.
Something tells me they won't be spending their twilight years working the fields, but I suppose there's always a convenient counterexample or two out there to latch onto if you're looking for ways to ignore the broad trends.
All you're really saying is that the stock market is higher than it was in 2008. It's a true statement, but I don't feel that it's very insightful.
Huh? No, I'm saying that a billionaire may have lost all their investments, but chances are they will never be so poor as to become one of the traveling poor when they are old. The crash in 2008 didn't just wipe out investments, tons of poor Americans had no investments anyway. The crash took out people's livelihoods, their jobs and homes. And without health insurance, they tend to ignore health problems that gradually become more expensive problems that can also wipe them out. They are too poor and too old to recover from these types of loss, and the government benefits they are entitled are not enough to keep them homed and healthy.
The rich who lost money in the stock market will never in their lives have to consider these issues, and frankly I'm shocked at how often this stuff seems to fly over the heads of people on this website.
The rich who lost money in the stock market will never in their lives have to consider these issues, and frankly I'm shocked at how often this stuff seems to fly over the heads of people on this website.
This opens with one of the the people featured in Nomadland, (https://www.imdb.com/title/tt9770150/) the Oscar winning film from last year.
The article was written by Jessica Bruder, who wrote the Nomadland novel.
Well alrighty then, that would be it.
Watched the movie a couple weeks back, and it's disturbing in the same way that other society falling apart movies are. There's an ambiguity over if the people are doing it by choice or if they're forced, or if they're just choosing to because the have to, and it's easier to not hate things that way.
Watched the movie a couple weeks back, and it's disturbing in the same way that other society falling apart movies are. There's an ambiguity over if the people are doing it by choice or if they're forced, or if they're just choosing to because the have to, and it's easier to not hate things that way.
Nomadland (the book) is nonfiction, not a novel.
You're right. The movie Nomadland is based on the book, but has been fictionalized.
I am lucky enough to live in a European country where I don't need to work after a certain age, because our social safety net ensures just that. I plan on retiring before that, but from our point of view, it seems absurd that the US can't / won't offer the same to their seniors.
I too live in europe but I'm not so optimistic about it, given the societal trends it's likely my retirement age will be increased once or twice again before I reach it.
this combined with inflation and the raise in price of specific things will probably means that the received amount won't be enough to live with.
> The average EU country would need to have more than four times (434 percent) its current annual gross domestic product (GDP) in the bank today, earning interest at the government’s borrowing rate, in order to fund current policies indefinitely. (2009)
https://www.cato.org/sites/cato.org/files/articles/gokhale-N...
https://www.cato.org/sites/cato.org/files/articles/gokhale-N...
Friend (tenured economics professor) once only half-jokingly told me, that having children who will take care of you when you are old is the most dependable retirement scheme.
It may have been a joke by your friend but it's also has an element of truth to it and is how many cultures across the world understand 'retirement'. It's only since I came to America that I've realized the idea of children having an obligation to take care of their parents when they're elderly could even be controversial.
That requires culture in which it is expected of kids to support parents in old age. Or at least a culture that does not see that as a bad thing.
Most Americans have a form of the culture. The details are different, but most Americans take care of their parents in some form. However because America is a mix of cultures there is a lot of disagreement on how to take care of parents and so you can always find someone of a different cultural influence who isn't doing what you would and look down on them.
There are those who don't have kids (or the kids are dead). There are also those who the kids have moved far enough away that they can't really take care of the parents like they want to. However those are not actually the majority cases.
There are those who don't have kids (or the kids are dead). There are also those who the kids have moved far enough away that they can't really take care of the parents like they want to. However those are not actually the majority cases.
> There are also those who the kids have moved far enough away that they can't really take care of the parents like they want to. However those are not actually the majority cases
Those cases are very over-represented on HN compared to what's typical nationally and may very well be the local majority here.
Those cases are very over-represented on HN compared to what's typical nationally and may very well be the local majority here.
The other side of this is lost now. Where grandparents provide childcare before they are too old.
May parents have to first pay for childcare and then have to help out their parents.
May parents have to first pay for childcare and then have to help out their parents.
Grandparents can be occasional babysitter, but not daily childcare provider.
They have jobs in their own, until they are too weak for those. And then, they are also too weak to be primary childcare. Mutual help do a lot, but asking them to replace childcare is unrealistic.
They have jobs in their own, until they are too weak for those. And then, they are also too weak to be primary childcare. Mutual help do a lot, but asking them to replace childcare is unrealistic.
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Childless friends tell me they won't have kids because they are too expensive. I tell them they are thinking about it wrong. They own a house and talk about it as their best investment. Well, kids are an investment. A high risk/high reward investment for sure. But possibly the greatest investment they will ever make, due at least in part to the reason your friend mentioned.
> I tell them they're thinking about it wrong
You're talking about kids as financial investments and they're the irrational ones?
BTW, the average cost of raising a child 0-17 in the US ~$230k. That amount alone sitting in an index fund over many decades will provide for you more than any single person ever could.
You're talking about kids as financial investments and they're the irrational ones?
BTW, the average cost of raising a child 0-17 in the US ~$230k. That amount alone sitting in an index fund over many decades will provide for you more than any single person ever could.
So you have a big pile of cash. And you will just use it to pay someone to take care of you in your old age. And they will do it lovingly because you paid them. They won't take advantage or even abuse you when you get to the point of not being able to do anything about it yourself.
My counterpoint to this is: it's worth it to regret the last few years than to regret it an entire lifetime. I know I'll regret kids.
Edit: Goes without saying that you'll need to plan for your retirement. I fully anticipate assisted suicide being a legal option during my old age.
Edit: Goes without saying that you'll need to plan for your retirement. I fully anticipate assisted suicide being a legal option during my old age.
What if the childless friends are planning to kill themselves once they need assistance? Then their calculations make sense.
I have kids, but I still do not want them to spend their time caring for me on a constant basis. I hope I have the ability and physical will to take myself out before that happens. I saw what my parents gave up taking care of one set of my grandparents, I do not wish that on anyone.
They “lived” into the upper 90s (over a span of 30 years since the grandparents were 15 years apart in age) and I consider my parents to have wasted many of their best years.
I have kids, but I still do not want them to spend their time caring for me on a constant basis. I hope I have the ability and physical will to take myself out before that happens. I saw what my parents gave up taking care of one set of my grandparents, I do not wish that on anyone.
They “lived” into the upper 90s (over a span of 30 years since the grandparents were 15 years apart in age) and I consider my parents to have wasted many of their best years.
It seems very sad to me to think of it as wasting your best years taking care of your aging parents. I considered it a privilege to take care of my parents to the end. To each his own.
This is a good way to make your adult kids hate you. Trust me, I know.
My wife's mom constantly told her growing up that she would have to take care of her mom when she was old. And yet she abused her horribly. Poor investment decision!
This is pretty much the well-accepted economic explanation as to why strength of social support systems is observed to be inversely related to fertility rate.
[deleted]
Social security doesn't seem to work too badly (although the $500 listed in the article implies that the lady featured didn't put together a full career of anything). It's certainly more sustainable than Medicare (US old-age health system for you furriners).
You could argue that a guaranteed income program consists purely of increasing the subsidies for SS and taking money from 'the rich', but that'll require more political will than exists.
An interesting situation that I see a lot of is folks who spent an entire worklife doing largely cash work (construction, waitresses, bartenders, business owners who never took a reported salary) who find themselves getting older with little money on the horizon. This is probably 50% of the people I know.
You could argue that a guaranteed income program consists purely of increasing the subsidies for SS and taking money from 'the rich', but that'll require more political will than exists.
An interesting situation that I see a lot of is folks who spent an entire worklife doing largely cash work (construction, waitresses, bartenders, business owners who never took a reported salary) who find themselves getting older with little money on the horizon. This is probably 50% of the people I know.
> The report pointed to $52.72 trillion in unfunded Medicare benefits and $37.60 trillion in unfunded Social Security benefits
https://www.accountingtoday.com/news/u-s-governments-financi...
https://www.accountingtoday.com/news/u-s-governments-financi...
I was just musing about how perfectly constructed this article is to appeal to a tech cubicle employee.
1) Doom porn for those worried about their later years (Hint: it's unlikely that you can pull a full career out of programming, hw engineering, tech marketing).
2) Amazon.
3) Van living.
..a) Sounds good to a single engineer who would rather mountain bike than construct one more product that rhymes with the last 5.
..b) Van design and construction is an interesting problem, especially the unsolved issues of sanitation.
4) Quartzsite, BLM land, other big get-togethers. Burning Man for introverts. Maybe there's room for a new Woody Guthrie.
5) Bob Wells and the whole van living youtube biz. Teaching people how to shit in a bucket can actually pay the bills in our brave new world. Go figure.
6) Often discussed never solved social issues (guaranteed income, public health care). Grave concern can be shown by everyone.
It's got it all.
1) Doom porn for those worried about their later years (Hint: it's unlikely that you can pull a full career out of programming, hw engineering, tech marketing).
2) Amazon.
3) Van living.
..a) Sounds good to a single engineer who would rather mountain bike than construct one more product that rhymes with the last 5.
..b) Van design and construction is an interesting problem, especially the unsolved issues of sanitation.
4) Quartzsite, BLM land, other big get-togethers. Burning Man for introverts. Maybe there's room for a new Woody Guthrie.
5) Bob Wells and the whole van living youtube biz. Teaching people how to shit in a bucket can actually pay the bills in our brave new world. Go figure.
6) Often discussed never solved social issues (guaranteed income, public health care). Grave concern can be shown by everyone.
It's got it all.
I cannot claim to speak for the entirety of Gen X, but most of us find this unsurprising. Killer bees, acid rain, sex that kills, nuclear war, we have been waiting for the other shoe to drop for decades. We will finally have our Road Warrior future, it's just that we didn't expect to be grey-haired for it.
How do you suppose all the people in the article are doing now, seven years later?
[deleted]
I don't understand why able-bodied/minded people remain in minimum wage jobs their entire life. And I made minimum wage myself working at a grocery store and video rental shop. The lady in the article was 60 in 2014. Why didn't she ever consider learning skills along the way that would offer salary growth or just flat out apply for higher paying jobs? I managed to raise my hourly wage from $5.15 to $27 over 6 years with only a high school diploma. And I was morbidly obese at the time too so it wasn't for my looks. We could at least push young minimum wage earners today toward learning a trade or other areas experiencing labor shortage like truckers, etc.
I live in Europe. Retirement is very much on my mind but more in the sense that I need to secure a little more than just the state pension. You can live on that but only barely. A lot of European countries are lot poorer than the US. Yet retirement is a thing in those countries and not really under any threat.
The need to work and the reality that a lot of work is just busy work that isn't really that critical because all the critical work is increasingly automated does not help with this. No offense but I work doing CTO work in startups and technically it's been a long time since I did anything close to producing critical goods or services. It's nice what I do and I live on it but I can't say with a straight face that it is all that critical or important. A lot of our jobs are like that. We keep ourselves busy doing things for each other or ourselves and try to monetize that. I can probably do that beyond retirement if I stay healthy. I might even enjoy that.
Post scarcity society is not that different from where we are today (at least us privileged people working tech jobs). Poverty is increasingly having to do actual work to feed yourself. In most countries that at least gets you to retirement. The US is kind of unique in that it is very wealthy and yet does not take care of its people in the same way that much poorer countries have been doing for the last century.