The Life of Celia

22 thoughts on “The Life of Celia”

1. Celia,

   You do realize that whatever comes into existence beyond our MSM as an official MiniTru is going to declare everything prior to the last entry to be bourgeois lies. And grounds for declaration as a vrag naroda, and a klassovyi vrag.

   The last entry is the best case scenario, if we fight very hard, and are very lucky. And if there are enough Oathkeepers.

   Subotai Bahadur

2. Sounds like my life Celia – It is your daughter’s generation – and below – who will really get the shaft with social security –

3. SB – that’s me, a stiff-necked stubborn middle-class enemy of the all-encompassing State!

4. As a 69 year old may I point out that retirement at 65 is a foolish idea. In the first place today’s 65 year old person will probably live to see his/her 100th birthday unless Obama’s death panels actually manage to kill someone.

   Living to 100 means 35 years in ‘retirement’ with nothing to do. Sadly, boredom is seldom fatal. Your Cecilia started work at 22. If she retires at 65 and dies at 100 this means she has lived 100 years but supported herself for only 43 years — 57 years as a parasite.

   Better to plan to work until you die. Be self-supporting. Working for money is much more interesting and much cheaper than doing nothing. Further because you are beholden to no one, you keep your independence.

   After 65, Cecilia might find profitable employment flying Preditors both here and abroad for governments and lawyers. She should stay away from ‘assisted living’ (another word for prison).

   The major problem will be those pesky ‘progressives’ who will pass a law requiring people over 65 to give their jobs to out-of-work 18-24 yr olds.

5. Sol, based on mortality statistics, retirement is the deadliest occupation in the world with a 100% fatality rate, all nations. The only thing that exceeds it is birth.

6. Sol, your expectation of living 100 if you reach 65 is a bit optimistic. The stats for 2009 (last year I could find) give 17+ more years for males who reach 65, just under 20 for females (82.2 and 84.9 average expectation). Though I expect we all hope to exceed those numbers as long as we remain reasonably active.

   I’m not certain if I’d consider people who are retired – especially if they have reached the age where further work won’t increase their pension – as parasites. Though I would argue that the age where further work doesn’t increase the pension should be set a lot higher than it currently is, and the minimum reduced-benefit retirement age should increase for any guaranteed-inflation-adjusted lifetime retirement plan. But is someone living on their savings and investments a parasite? Is a high-income earner who will NEVER, even if they do live to 100, get back the amount of money they would have received if they’d been free the put the full Social Security taxes they and their employers paid into a 401K-style investment account a parasite?

   All that being said: if I reach say, 68, and I won’t get any further SS increases, and I’ve put away a tidy nest egg in my 401K/403b/IRA/sock-under-the-bed, and I have enough to live on comfortably, why *shouldn’t* I retire, or at least switch to part-time work? I’ve got a *lot* of things I haven’t been able to do as much as I’d like because of insufficient free time – travel, volunteering, spending time with family, reading, gardening . . . I like my job, and might very well want to continue doing it on a part time or contract basis. But if I reach a point where I can support myself comfortably, why should I trade my remaining active life time – the only life time I have remaining – doing anything but that which gives me the most satisfaction.

   But, I like the idea of mandatory retirement once you’ve reached your full retirement age.

   IF applied first to all elected officials from the top down. I’d be generous – I’d allow them to complete the term they reached that age in. But that’s it – you’re over the age, you may not run again for *any* elected office at the federal, state, or local level.

   Further, the retirement age for elected officials should be set the the minimum full retirement age of any government employee at their level of jurisdiction. For city officials, it would probably be the 50-something age that police and fire workers qualify for their full pension. For state, probably the same. For federal level, it would probably be the age that military personnel qualify for their full pension.

   Yes, I’m a little tongue-in-cheek here, but only a little. Due to the seniority system in Congress, and the great advantages incumbents have running for re-election, we have a considerable number well past retirement age that keep on hanging on, and on, and on.

   The latest stats I found online was for last year (2011). Perhaps because of recent Republican gains, the Republicans currently skew a little younger than the Democrats, but only a little. But the average ages (rounded to nearest year up or down):

   Senate
   D – 63
   R – 61

   House
   D – 60
   R – 55

   With a considerable number between 70 and 80. The oldest listed for the year were 3(!) Senators who were 87, and a Representative who was 88.

   It looks like if Congress imposes a mandatory retirement age and *doesn’t* exempt themselves that about a quarter of the entire Congress will be announcing as soon as the bill is signed. And even if they don’t resign immediately close to a third would not be eligible to run for re-election.

7. I’ve never viewed retirement as the point at which I stop working so much as the point where I can afford to stop working for money and start working at things I’m interested in and/or care about.

   The way I see it, retirement is when you have both time and money in sufficient amounts that you can pursue your interests etc. No way to be bored there.

   If you lack money but have time, you retired too soon — that’s basically unemployment, and yes, it is boring.

   If you lack time buy have money, that’s the typical midlife tedium of the employed. I guess that’s boring too, or at least tedious. Save that money someday maybe you can retire. (I hope so)

   Having neither is called desperation. Many of us have been there, and it is not a pretty place, but it isn’t boring… Me, I’d rather be bored.

   fwiw.

8. Same for me, John – I’ll always be working, ‘retirement’ just means to me that I work at what I choose to do, what I am interested in and the hours that I choose to do it.
   My business partner is in her eighties – and she is still working as an editor, even as I take over more and more of the management.
   I couldn’t go back to big corporate, or to regular hours of someone elses’ choosing. I stuck it out for as long as I could.

9. It has been my experience that inflation wipes out savings. A dollar saved today will be worth a 20 cents in 30 years. Government statistics understate inflation for political reasons. Same as unemployment stats.

   When FDR got social security passed life expectancy was 64. That’s why retirement was set at 65. Only a few collected. Living to 100 is rare today, and life expectancy is based on people who died this year. However, new drugs are changing things so much that those of us who are living are going to set new longevity records (provided we are not killed by something other than a body wearing out). 100 may seem pretty old, but it can easily happen.

   In the brave new world that Obama and the progressives are creating, people who are retired will become an unacceptable burden to society. Obama and progressives believe it is one thing to give welfare to the poor because they might someday get a useful job. But retired people have sworn off work for as long as they live.

10. I expect average life expectancy will continue to rise, and I fully agree about the long-term consequence of Obama’s policies.

    But savings are only decaying relative to value if you are sticking it in a tin can under the bed (not even then if the savings were gold or silver, probably).

    I don’t think I’ve beat the market with my retirement funds (pretty hard to do since for a long, long, time most of my money went into index funds that basically tracked the market). But despite taking a pretty severe beating during market downturns, my retirement accounts today are worth considerably more in constant dollars than just the inflation-adjusted amount I put in. Given that my early working years I wasn’t able to max out my accounts, the higher interest rates of those long-gone days didn’t help as much as you’d expect – the bulk of the money went in during the last decade or so.

    I’ve got a 15-20 years more until I reach my full SS retirement age, and I intend to keep contributing. Even if SS stays solvent and I get to take out the full inflation-adjusted amount monthly they currently claim I’m entitled to, it looks like I’ll be counting much more on my retirement savings than SS.

    Right now, it looks like even without major structural changes SS could be kept solvent an additional couple of decades if they moved up the notional minimum/”full”/max SS requirement ages by a couple of years for workers below 50 – say, minimum SS age at 64-5, “full” age to 67-8, max age(no further increase in payout possible) to 70-71. And look at the cost of living formula – right now it’s increasing faster than the actual COLA.

    But instead of doing it now, when it’s only mildly painful both parties prefer to keep kicking the can down the road in hopes that when it *can’t* be ignored they won’t be around to take the heat. I agree that anyone who expects to live on SS alone will very likely need to keep on working. And unless you have considerable savings socked away only an . . . extreme optimist, shall we say? . . . would take early retirement with the permanently reduced monthly payout.

    If I had been able to invest all my SS money the same way I did my 401K/IRA funds, I would be able to retire at 70 and live to 100+ while still drawing considerably more than the maximum promised SS payout. But I wasn’t given that option.

11. “It has been my experience that inflation wipes out savings. A dollar saved today will be worth a 20 cents in 30 years. Government statistics understate inflation for political reasons. Same as unemployment stats.”

    I don’t think most people, especially kids, understand what inflation has done. In 1969, I was 31 years old working as a surgery resident at LA County Hospital. My father died in January and left me $10,000 in his life insurance. I split it with my mother (They were separated) and buried him, leaving me $3500. I used that to buy a nice home in South Pasadena, CA for $35,000. I put 10% down and the seller took a second TD for 10%. My house payment was $204/ month. My salary at the hospital was $17,000/ year. We had two kids and the third was born in April (He just celebrated his 43rd BD). My wife was not working since our first was born in 1965. She had a cleaning lady. That year I bought a new 1968 Mustang convertible for $50 down and $95/ month. A year later, I bought a Ford Country Squire station wagon for $4800. I forget the payments. I have recently concluded that that is the richest I have ever been. Calculating in constant dollars, that salary was the equivalent of $170,000/ year. I’ve made more money but it was already depreciated.

    About 15 years later, that house was for sale for $595,000. I didn’t keep it as a rental when I moved to Orange County and have kicked myself ever since. At that time houses had not appreciated in years and I had trouble selling it for the price I had paid for it. Jimmy Carter was elected in 1976 and that was when inflation really took off. I estimate that the dollar is now worth 10 cents in 1969 currency. I think it is worth about 2 cents in 1930 currency. Kids just don’t realize what it means when they read about a Model T Ford selling for 600 dollars. Or 300 dollars.

    I think the 1970s taught people that houses were a hedge against inflation. That was true until 2005. In many areas, like Orange County CA, it is still true but you had to buy the house before 1978 or so.

12. Obama and progressives believe it is one thing to give welfare to the poor because they might someday get a useful job.

    Perhaps “progressives” (and Lord, do I hate that term) believe that, but Obama is a Chicago precinct captain writ large. People dependent on the precinct are reliable voters. Period.

13. My revised retirement plan: leave the workforce feet first. Lucky I suck at golf.

14. People are assuming they won’t nationalize 401K’s/IRAs. Which of course they’ve been discussing since 2007 and sent out the RFI from DoL in 2010. I can’t find the RFI but google has plenty of financial industry replies to it. I read the RFI and I can give you $6 Trillion reasons why they will if they can. You have fun now.

    http://money.usnews.com/money/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans

15. So Celia – are you planning – like me – to head up to the mountains (figuratively speaking in TX) with your rifle and dog when it really gets bad? ;-)

16. Michael, I don’t disagree with you about inflation – it’s been pretty bad. I found a link that claims to calculate inflation for any two years between 1800 and 2010. I can’t testify on its overall accuracy, but applying it to things like starting salaries, etc it seems reasonably accurate for the years between 1960 and 2010. It claims that $1000 in 1960 was worth $7278 in 2010.

    But California city real estate has been going up faster than overall inflation for a long, long, time.

    Our current house was built in 1963 – it sold then for about $17,000. (San Jose, CA)

    We bought it in 1997 for about $400,000 – WAY over the pure inflation value from 1963 (~$90,000). At the peak of the market in 2006 or early 2007 it was supposedly worth just over $1,000,000. Which is ridiculous – going by the overall non-home inflation rate from when we bought it should have been about half that(a dollar in 1997 was equivalent to ~$1.35 in 2007). And going by inflation since 1963 it should have been $114,000 at the peak of the market (the real estate bubble price was 8x the pure inflation adjustment)

    We’re lucky – our house is still ahead of inflation since we bought it – we got in before the boom really took off. But we have neighbors who bought at the peak of the market who are still, 5 years later, a couple of hundred thousand dollars underwater.

    For you non-urban-California people who think I’m describing a mansion – it’s a 4 bedroom ranch house (<2000 sf) on a quarter acre of land, in a comfortably middle (not upper) class neighborhood. I grew up in rural northern California, and you could by a comparable house there (Shasta, Tehama, and Butte counties) for under a third the price – perhaps for a quarter the price.

    If you don't buy in a bubble, buy within your budget, and hold for the long term, houses are still a reasonable inflation hedge for most people. Unless you plan to sell it, though, a house is just a place to live. If you pay it off, owning it can be cheaper than renting (certainly in my area – house rents are 3 or 4 times as much as property taxes). But unless you sell it and move someplace less expensive having a house but no savings is still pretty tight.

    But my retirement accounts over those same few years have done a few percentage points better than inflation. Not a lot, but enough. Nothing exotic – mostly mutual funds from reputable vendors. We don't expect to be "wealthy" on retirement – but if things don't go dramatically wrong we hope to be reasonably comfortable.

    Starting salary for an engineer in Silicon Valley back in 1982 was about $30K. Today it's – surprise! – almost the same, adjusting for inflation ($70K or so). And if that hypothetical engineer had been putting aside 15% in savings, and just tracked inflation on their investments every year, and never earned more in inflation-adjusted dollars than their starting salary – they'd have about $60,000 dollars saved. In the real world, just keeping up with the market's performance, they'd have considerably more. The thing is, these returns were not limited to people in high tech or California – they were, and are, equally available to anyone in the US.

    If you've got a 401K or 403B available, do your best to max it out. If not, max out your IRA (still available even after you've maxed out your 401K/403B, too). It doesn't mean they you have to live like a monk unless you were already stretched to the limit – for most of us, it means eating out less often (or less expensively), driving the old car another year, saving an extra year or two for that big vacation. But the payoff is that when you're ready to retire you should be able to make the work/retire decision based on what you want to do rather than on what you *have* to do.

17. Nicole Gelinas: The Life of Zachary

18. MK – about that time – 1969 – my father had an accounting franchise from Fresno to Reno – 4 offices – I think he was paying his people doing the books starting around $400/month – nobody was complaining.

    Does anyone besides me remember Jimmy Carter’s inflation at 21% a year?

    And these days – just finished doing my taxes – was surprised despite having a healthy bank account – the credit union didn’t even send an interest 1099 – was something like $5?

    So we are still getting the shaft although certainly not as bad as under Carter.

    You are right – just as a good account principle – It’s not the gross – but the net – that matters.

19. I think we are headed for another bought of inflation as the DC crowd tries to deal with the national debt. The collapse in house prices has taken away the concept of houses as inflation hedges for the generation of my kids. Two own their own and one of them (typically the non-college degree holder) has done very well. I helped him buy a nice condo at the bottom of the last real estate recession in 1991. He bought it for $105,000. He has turned that investment into a nice two story home worth about $600,000. His wife has a home based marketing business that is very successful and they are starting to look at a bigger house with a pool nearby, Remember, this is California and a pretty recession proof area. Although there are a lot of foreclosures, those like my son who bought early enough are fine.

    Proposition 13, passed in 1978, has been behind a lot of the real estate appreciation as it has kept property taxes low for homeowners, especially if you stay in the same house. The Democrats keep trying to repeal it but very time they start sneaking something in to do so, all hell breaks loose. California voters may be dumb but there are still enough homeowners to spot a rat when they see it.

    If I had a 401k, I would be concerned about the feds trying to seize them a la Argentina. We may be approaching an era, never seen before in this country, when hidden gold coins will be the store of wealth for people. There was talk about it in the late 70s, before Reagan came along and ended it. I can remember when friends of mine bought bags of silver quarters and dimes because it was assumed that gold would be too expensive for barter commerce. The Hunt brothers silver caper put a lot of that to rest for those who remember. Silver went to $50 / ounce, than collapsed. It could come again. Somebody has all those silver dimes and quarters,

    I can even remember when Las Vegas used silver dollars as chips. Boy do I wish I’d saved a couple of hundred someplace.

    Unless Romney wins and does a very good job of unwinding this mess, we are headed for rough water financially. At the age of 74, I’m not too worried about myself. I did my traveling and sailing and expensive houses when I was in my 40s and 50s. I do worry about my kids. One is still in college (I told her she’ll repay her student loans with my life insurance. She snorted but it’s true). She has a good work ethic and should be OK. She wants to live in France. We’ve taken her there several times and she had some connections that may help.

    Another is a grad student but has language skills in demand (Arabic, for example) and she will be OK.

    The older three seem to be OK although they know they will never see SS or any pension, really. My daughter who is an FBI agent and a lefty politically is probably the least realistic but she is a saver and her government job is safe.

    I cannot predict what the world will be like in ten years. I have usually been wrong before so I will say only that it will be different. The baby boomers have seen to that.

20. I’m not really that concerned about the government “taking” 401ks, at least not traditional ones. Remember that the money in your 401k/IRA is before tax – the government already owns a significant fraction of it. Rather than risk the political firestorm from outright confiscation or conversion it is far more likely that the government will simply fiddle with the rate structure or mandate higher or earlier minimum withdrawls. The government cannot simply seize assets – to actually raise money it has to sell them to someone and the sums involved are too large in this country for the government to do that without a massive hit to asset values. The only situation where it makes any kind of sense is in the midst of a general meltdown so severe that there will be a lot worse things to worry about.

    Roths are different of course. Interestingly, assuming constant tax rates there is no real financial difference between a Roth and conventional IRA for the owner. However financial impact on the government can be quite different – basically if the investor outperforms treasuries the government gets less money, when the investor underperforms the government is better off. But again, if the government wants to get at the money, the best way is probably not confiscation. Instead, I expect that Roths will lose some or all of their tax-free treatment on income (see the recent proposal around limiting the deductability of municiple bond interest). So if general rates increase say 5% across the board, expect a 5% tax on the net income in Roth-IRAs. It’s “fair” – nothing in the tax code is ever “permanent” and this is not trying to claim any past income, simply saying that taxes are now higher and that applies to everyone. Roth holders will be upset, but so will everyone in this case and they will have no real claim that they have been treated worse.

    On inherited IRAs I wouldn’t be shocked to see the rules ultimately shift to a mandatory 5 year liquidation – fewer people are impacted and inheritances have an aspect of “Found money” about them that minimizes the outrage. And a lot of people liquidate them anyway.

    In short, I doubt we will see mass confication or forced conversion of IRAs/pensions. More can be acheived with a lot less disruption by fiddling the rules and increasing the amount of the income/outflow subject to taxation.

21. Phwest, that is a great comment.

    The two things that give me hope now are 1) the enterprising values of most Americans and 2) the fact that things look so bad to so many people. The last time things looked this bad was in the late-1970s. If we don’t kill ourselves off with WMD or epidemics there are tech breakthroughs just over the horizon that promise huge increases in productivity and wealth.

    Of course we have to make it through the next few years first.

22. >>> you’re over the age, you may not run again for *any* elected office at the federal, state, or local level.

    I’m all in favor of this if we set the retirement age to 21.

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