Who is able and going to put the SS increase into savings

Nemo2 said:
Enron anybody? Nortel? Kodak? Lehman Bros? Blockbuster? "Next contestant please."
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Spin again .

we are talking investing in diversified funds , NOT SPECULATING IN INDIVIDUAL COMPANIES betting on the whims of one companies outcome.

you need to learn the differences between speculating vs investing …betting the ranch on a few stocks is speculating not investing.

when you try to beat the market at its own gaming by betting on just a few stocks you are speculating …when you buy an s&p 500 fund or total market fund or any diversified fund you are not speculating or trying to beat the market at its own game .

all those stocks you mentioned were held by diversified funds but they weren’t a blip on the radar
 

Nemo2 said:
There has to be an incentive to buy into companies/corporations/businesses in order to keep the machine running, and for the investor, doing so is not without risk. If fixed income investments were taxed at the same rate, then why take a chance?
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Why take a chance? Because fixed income investments don't offer the same possibility of high rates of returns as capital gains type investments.

Oops - I posted this before seeing @mathjak107's almost identical reply.
 
StarSong said:
Why take a chance? Because fixed income investments don't offer the same possibility of high rates of returns as capital gains.
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The key word being 'possibility'. And, if capital gains are taxed at the same rate as fixed income, then said possibility narrows somewhat and a number of potential investors might opt for security.
 
Nemo2 said:
The point is not if the risk materializes or not, the point is that the risk exists.
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Life is fraught with risk. Working for a paycheck is also risky. Businesses lay workers off, reduce their hours, or close their doors entirely, often without a moment's notice or severance check.

Higher tax rates for earnings than investments keep paycheck-to-paycheck people broke while those with disposable income for investments continue to get richer.
 
Nemo2 said:
The point is not if the risk materializes or not, the point is that the risk exists.
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here is the real risk ..if we include all those stocks you listed and put 10k in a total market fund in 2008 you would have 34,459 today vs cash instruments of 11,000 dollars . a gain of just 1k

if we go back to 2000 and include the lost decade for stocks you would have 41,388 today vs 14,226 in cash instruments .

subtracting out inflation and taxes which is the bigger risk of running out of money before you run out of time ?

since i am not sure of your math ability i will tell you .

at a 4% draw over the last 122 30 year cycles we have had , fixed income failed 64% of them and went broke before 30 years ... that is the actual results . it is considered totally unsafe at that failure rate
 
in practice , trying to take a 4% inflation draw from just fixed income has only a 47% success rate of lasting 30 years .

under 90% is unsafe

FIRECalc looked at the 122 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 122 cycles. The lowest and highest portfolio balance at the end of your retirement was $-517,560 to $2,349,575, with an average at the end of $191,397. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 64 cycles failed, for a success rate of 47.5%.


here is 50/50

FIRECalc looked at the 122 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 122 cycles. The lowest and highest portfolio balance at the end of your retirement was $-223,952 to $4,145,063, with an average at the end of $1,159,395. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 95.1%.
 
mathjak107 said:
here is the real risk ..if we include all those stocks you listed and put 10k in a total market fund in 2008 you would have 34,459 today vs cash instruments since then of 11,000 dollars . a gain of just 1k

if we go back to 2000 and include the lost decade for stocks you would have 41,388 today vs 14,226 in cash instruments .

subtracting out inflation and taxes which is the bigger risk of running out of money before you run out of time ?
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I think we're talking past each other here - my attempted point is that the perception of a greater risk exists, and that new/non-investors might look at the rates and think "I'm assured of getting 'x' returns in fixed income, whereas with equities I may not, and may even lose, so I'll go with fixed".
 
Nemo2 said:
I think we're talking past each other here - my attempted point is that the perception of a greater risk exists, and that new/non-investors might look at the rates and think "I'm assured of getting 'x' returns in fixed income, whereas with equities I may not, and may even lose, so I'll go with fixed".
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it is a case of believing ones own bull shit then as nothing is farther from the truth and data and facts prove they are taking on way more risk ...just look at the success rate to date of just fixed income ..it is horrible
 
mathjak107 said:
it is a case of believing ones own bull shit then as nothing is farther from the truth and data and facts prove they are taking on way more risk ...just look at the success rate to date of just fixed income ..it is horrible
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I would posit that, for non or new investors they don't have any bullshit to believe....yet.
 
Nemo2 said:
I would posit that, for non or new investors they don't have any bullshit to believe....yet.
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Things never change new or old .

many confused markets with their own poor investor behavior if they lost money …

many acted badly lost money and now want to blame markets . But they can’t because the facts speak for themselves.

so instead they try to hide under a rock really putting their retirement at risk with growth from fixed income that can’t keep up with inflation ,taxes and needs .

especially the unexpected emergency spending and unexpected spending
 
mathjak107 said:
the gain was taxed at long term rates which were raised to 20% for that level , plus at that level there is a 3.80% investment tax so it was 23.80% , plus the higher income from that sale tripped the amt tax penalty on all other income .
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Yes, by god!

This happened to me in tax year 2017.

The AMT was like a little dig at the end...

The investment tax came in in 2014, as a part of the financing for the ACA.

I am also pleased to report that this May a measure will appear on the ballot for the city of Portland. If passed by the voters---and why wouldn't they? they've passed mandatory pre-school, and two homeless aid levies in the past 4 years, all based on property tax in a city that has 47% renters, who expect that they don't have to pay--the new measure will assess a .75% cap gains tax to pay for public legal representation for renters in landlord tenant disputes.

mathjak107 said:
it actually worked out to 30% tax FROM DOLLAR ONE , including ny state and nyc taxes .

a flat 30% with no farther exemptions or deductions is quite a bit. that isn’t the same as a 30% marginal rate , that is a 30% flat rate with no laddering of taxes like a marginal rate.

marginal rate is how we normally get taxed ..up to x amount it is one tax rate then from x to y another and from y to z another …so it is much less normally then the marginal rate .

but not in this case once you hit amt level
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"Act dumb and hide the rice...".
 
Sawfish said:
Yes, by god!

This happened to me in tax year 2017.

The AMT was like a little dig at the end...

The investment tax came in in 2014, as a part of the financing for the ACA.

I am also pleased to report that this May a measure will appear on the ballot for the city of Portland. If passed by the voters---and why wouldn't they? they've passed mandatory pre-school, and two homeless aid levies in the past 4 years, all based on property tax in a city that has 47% renters, who expect that they don't have to pay--the new measure will assess a .75% cap gains tax to pay for public legal representation for renters in landlord tenant disputes.



"Act dumb and hide the rice...".
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Those who parrot others and never fully understand what they comment on , do not realize what high capital gains can do to income .

plus hit those levels while on Medicare and hold on to your hat when you see the Medicare surcharges .

for a couple it can be an Extra 1600 a month on top of the standard payment
 
mathjak107 said:
Because fixed income can never produce the gains other assets can

you would have to really cherry pick to find longer periods of time Equities didn’t blow fixed income away
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Diverging somewhat, we have "silo'ed" our retirement accounts based on expected sequence of need.

In our combined Schwab retirement portfolio, currently 80% of which are Roths, we have five separate accounts, one of which is the brokerage account, and the other four occupy an "order of withdrawal" strategy. Simply put, the last one to be tapped is expected (hope, hope) to pass intact to our daughter, and currently is probably 80% stock--growth strategy--while the other three have varying levels of risk, with the higher risk ones to be tapped farther down the road, and the one (an IRA) being tapped for RMD in fixed income. That one at current withdrawal rate would last 20 more years, which implies that there's too much in fixed income at this point.

Interestingly, one of the four is a discretionary account. It's done well during grow phases; now that it's on my mind I'd better check.

We are living off of rental income of a few small apts, plus my SS, plus the RMD. There are two other retirement accounts, Roths, under Ameriprize and TD Ameritrade set up when each of us was contracting. Hopefully these, as well as the apts, will pass intact to our daughter.

Everyone has their own priorities for life. Passing more than I started with, as much as possible, to heirs is mine.
 
It doesn’t matter what the growth vehicles are as long as they will outperform inflation and grow enough to meet your goals ..real estate works fine …nothing we wanted in retirement.

we held a small commercial real estate business consisting of 9 co-op apartments overlooking Central Park and some lease rights on commercial property. But nothing we want to deal with in retirement..

we only want liquid assets which can be traded and sold with a mouse click .so all has been sold

whatever works ….

many could have actually had less stressful lives sweating all unexpected bills if they didn’t fear investing and hung out only in fixed income .

but not my problem , they have to deal with that
 
mathjak107 said:
Because fixed income can never produce the gains other assets can

you would have to really cherry pick to find longer periods of time Equities didn’t blow fixed income away
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Hah!

Yes, I accept that. The attraction of fixed income accounts is that they require a smaller leap of faith than equities, so there's that as an emotional hook.

Yes, it most certainly does need to be diversified. The irony is that when young and starting with very little, you're temped to go for home run positions, all in. >20% return--much more, hopefully.

This has only worked for me in RE, and then not always.

What many people may not realize is that as you acquire a comfortable amount of assets, and you do not need as high a rate of return (6-8% on 1.5M is quite satisfactory, whereas you wanted >20% on 50K), you can then diversify easily, creating a sort of reinforced financial foundation for yourself/family. This is very desirable for the long run.

So I don't know about the the poor, but yes, the rich get richer, unless they screw up big-time or have CATASTROPHIC luck.

Hah! This Christmas eve, after a dinner with a bunch of friends of ages varying between 75 (me) and 40, the conversation came around to "when would a person feel like they had enough"? The 40 year old guy--a very reasonable and insightful sort--asked me if I had 10M wouldn't that be enough? Wouldn't that be enough for anyone, to just step back and enjoy?

So he asked me if I had 10M right now, what would I do.

It didn't take long to admit to him that I'd try to make it 75-100% greater within the remainder of my life. It should be far easier than getting the first 10M.

It'll never be any different for me, I'm afraid.
 
mathjak107 said:
[SNIP!]...with in another 2 to 3 decades ..that is still long term money.
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Yes! It suggests the need to break it into maybe four year segments (silos) each with a different asset allocation.

I now suspect that few see this.
mathjak107 said:
equities are long term assets and need to be treated as such.

even those who retired in 2000 or 2008 are still ahead of the game
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Great observations!
 
When one is living off their portfolio and need say a 4% draw to meet their lifestyle, that 4% draw is the same on 5 million as it is 500k .

it takes exactly the same returns and sequence to make both work.or both will fail.

in fact if the person living on 200k a year has little discretionary spending in the budget and the person living on 20k does , if cuts need to be made in draw the person with 20kis in better shape.

more money does not mean easier life . It usually means higher living expenses and higher lifestyle in more expensive places.

What determines your returns needed is the draw you take not how much you have

more money can just mean more choices in lifestyle but the percentage draw is determined by allocation regardless.

in both cases if cuts need to be made they both may get uprooted and have to move.

more money equals more choice
 
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mathjak107 said:
When one is living off their portfolio and need say a 4% draw to meet their lifestyle, that 4% draw is the same on 5 million as it is 500k .

it takes exactly the same returns and sequence to make both work.or both will fail.

in fact if the person living on 200k a year has little discretionary spending in the budget and the person living on 20k does , if cuts need to be made in draw the person with 20kis in better shape.

more money does not mean easier life . It usually means higher living expenses and higher lifestyle in more expensive places.

What determines your returns needed is the draw you take not how much you have

more money can just mean more choices in lifestyle but the percentage draw is determined by allocation regardless.

in both cases if cuts need to be made they both may get uprooted and have to move.

more money equals more choice
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When one is living off their portfolio and need say a 4% draw to meet their lifestyle, that 4% draw is the same on 5 million as it is 500k .

I flip-flop this a bit.

I'm willing to adjust my lifestyle to a degree to preserve capital. Lifestyle is one of the controllables. I'll admit that this is not for everyone.

So with a 500K portfolio I'd not take a 4% draw.

And this is possible because of other diversified assets that are not in the portfolio.

More money = more choice. It's up to you to make one that makes sense for your overall goals, and if you don't have such goals, it's easy to piss away money--very easy.

"the rich get rich, and..."
 
Sawfish said:
When one is living off their portfolio and need say a 4% draw to meet their lifestyle, that 4% draw is the same on 5 million as it is 500k .

I flip-flop this a bit.

I'm willing to adjust my lifestyle to a degree to preserve capital. Lifestyle is one of the controllables. I'll admit that this is not for everyone.

So with a 500K portfolio I'd not take a 4% draw.

And this is possible because of other diversified assets that are not in the portfolio.

More money = more choice. It's up to you to make one that makes sense for your overall goals, and if you don't have such goals, it's easy to piss away money--very easy.

"the rich get rich, and..."
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anyone is free to cut their draw at any income ..even the lowest levels can golden girl it and live even cheaper then they are .

but most of us have that line in the sand below which we rather not down grade to unless forced to .

to live here in queens is way cheaper then Manhattan but it still takes us all of social security , all of pension and a 3.60% draw from our portfolio to live just the way we want.

we enjoy doing things with our 6 grand kids which ain’t cheap , we both have a photography hobby , we like our occasional weekend trips , we enjoy eating out while on the run with our photography and I have studio time costs as a drummer .

so there isn’t much we want to change unless we are forced to .

we didn’t scrimp , save and invest for decades to look at it ..we want to enjoy what we have
 
Sawfish said:
Diverging somewhat, we have "silo'ed" our retirement accounts based on expected sequence of need.

In our combined Schwab retirement portfolio, currently 80% of which are Roths, we have five separate accounts, one of which is the brokerage account, and the other four occupy an "order of withdrawal" strategy. Simply put, the last one to be tapped is expected (hope, hope) to pass intact to our daughter, and currently is probably 80% stock--growth strategy--while the other three have varying levels of risk, with the higher risk ones to be tapped farther down the road, and the one (an IRA) being tapped for RMD in fixed income. That one at current withdrawal rate would last 20 more years, which implies that there's too much in fixed income at this point.

Interestingly, one of the four is a discretionary account. It's done well during grow phases; now that it's on my mind I'd better check.

We are living off of rental income of a few small apts, plus my SS, plus the RMD. There are two other retirement accounts, Roths, under Ameriprize and TD Ameritrade set up when each of us was contracting. Hopefully these, as well as the apts, will pass intact to our daughter.

Everyone has their own priorities for life. Passing more than I started with, as much as possible, to heirs is mine.
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We built silos too (multiple & independent streams of Income)
 

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