

An Incomprehensible Retirement - extremecake
https://medium.com/money-banking/875282f4fd57

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ChuckMcM
I think the Money Moustache guy has a much better take on this than someone
trying to figure out the complexities of finance.

Yes there is a limit to how much you can put into a retirement account that
_isn't taxed_ by the government, but there is no limit on how much of your
income you can save, caveat you need some of it to live on.

And while saving and investing can get as complicated as you want it can also
be greatly simplified with funds investing.

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saryant
I'm a big fan of the "lazy portfolio." Three funds, nothing more: Vanguard
total domestic stock, total international stock and total bond market. Buy and
hold forever (rebalancing towards more conservative assets as you near
retirement).

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philwelch
Vanguard even has target funds that do exactly this, rebalancing included.

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hexis
What are the names of those funds?

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gergles
VTSMX, VGTSX, VBMFX - with corresponding Admiral versions if you have enough
money, which are the same funds with even lower expense ratios.

Edit: You wanted the rebalancing funds (those are the component funds.) The
rebalancing funds are called "LifeStrategy" - see VASGX for an example.

~~~
saryant
There's also the "Target Retirement" family of funds. I'm currently in the
2050 fund, VFIFX.

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nazgulnarsil
While I don't agree with everything this article says, this is the money
quote: "If professionals who benefit from the economies of scale cannot
reasonably be expected to provide me with a stable retirement without outside
intervention, how can I be expected to do that for myself?"

And is spot on IMO. Whatever else is going on, we as a society are doing
poorly at this particular type of specialization. We have done insufficient
incentive engineering to make sure people don't regularly get scammed. It is
not a solved problem, it is not an easy problem. But it looks like we aren't
even working towards a solution right now.

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philwelch
The reason retirement doesn't work the same way as a bicycle shop is because
the incentives can get badly misaligned. With a bicycle shop, the better you
are at fixing bicycles, the more money you make, at least to a good-enough
order of approximation. Taking your customer's money just isn't possible
unless you give them back a working bicycle. But retirement--especially
"defined contribution" retirement--has a much weaker requirement. You give
money to a mutual fund, and then who knows what'll happen? The mutual fund
takes their fee off the top regardless. You let the company that's servicing
your 401k or IRA pick funds for you and they'll just pick some plausible
combination of their own funds. At least with pensions they have to maximize
their return to have any hope of profiting.

Probably the closest analogy to retirement is auto repair and maintenance. You
go in for an oil change and you get back a hundred-something-point inspection
where they want to do a thousand dollars worth of work on your car. If you
don't know anything about cars, there's no way to tell whether they're ripping
you off. With retirement it's even worse, because you started off by giving
them the money without any guarantee of how much money makes its way back to
you. And the only solution is to actually know something about investing,
which was pretty much what you were paying these companies for in the first
place.

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saalweachter
Is it just me, or is this article incredibly full of crap? First he goes on
about how the Fed is lying about inflation, then he kicks OWS. If he threw in
a claim that Fannie Mae caused the housing bubble, we'd have the insider
trifecta.

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sxcurry
Not just you, there's so much wrong about this article that I don't know where
to begin. My father is a retired Statistician, and I know that the computation
of inflation is a seriously considered matter by a lot of smart people. The
statement that "What’s important to note is that the government is
incentivized to report as low of an inflation number as possible and to keep
real inflation as high as tolerable." is completely false.

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beagle3
You appeal to vague authority. Inflation is looked at by smart people, but
many of the smart people whose job it is to define inflation computation are
appointed, paid and appreciated according to the perception of inflation.

Bernanke is destroying the USD. It might even be the right thing to do, but he
is definitely not frank about what and why he is doing it. Similarly, there
might be good reasons to overinflate and underreport - but the official
explanation and methodology around things like owner-equivalent-rent and
hedonistic correction are ad-hoc, not verifiable or repeatable, aquifer random
and somehow mostly reduce reported inflation.

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saalweachter
CPI closely matches every other inflation index, like the Billion Price Index.
In my experience people who claim The Man is lying about inflation usually are
just saying "zomg oil" or another small handfuls of commodities, and don't
really have any evidence beyond "everyone knows the government is a bunch of
lying liars".

Oil may be rising faster than inflation, or not, and energy costs could even
be rising faster than inflation. That would probably have profound
implications for the economy, but it don't make it inflation.

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beagle3
The BPI was apparently constructed to track CPI - there is no chance it would
track as closely as it does otherwise. But I can't find any documentation
about how its weighting is set or updated - can you point me to such
documentation?

Lets ignore subtle semantics, shall we? Definitions of inflation differ - some
restrict it to discussions of money supply (in which case, CPI is not
inflation), and some to cost of living (in which case, CPI is a measure of
inflation, but not necessarily a good or unbiased one)

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tunesmith
We can't really even match the long-term stock market averages. We tend to
make more money when times are good (when the market is high), and less money
when times are bad (when the market is low), so if we invest money as we
save/earn then we're generally buying high.

At some point you wonder if you should just give up on saving and instead
invest it into a business or a duplex or something.

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ISL
Buying a duplex _is_ saving. You're placing your wealth in a physical
structure (and tenants, perhaps) instead of a bank.

Different, but not so different.

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rmc
_As our society discovers and creates, we must cope with our combined
knowledge growing faster than our individual capacity to know things. Our
solution - thus far - has been to specialize. When what is known expands, each
individual becomes responsible for less breadth and more depth.

Back in the olden days there was only one kind of computer scientist. Before
that there was only one kind of car mechanic. And even before that there was
only one kind of doctor, who was also a barber. We used to know a lot less
about cutting hair._

Except that there has also been a trend _away_ from specialisation. e.g. food:
instead of a baker, butcher, grocer and fishmonger, you now have a
supermarket. e.g. household goods: instead of a chandler, tailor, cooper or
haberdashery, we have clothing & household shops.

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jkldotio
Isn't there substantial evidence that Goldman Sachs were telling clients to
make investments into areas they were themselves betting against? I am not
sure if they are the best people to use as support for any economic argument,
but especially given the wealth of other critics of pension sustainability who
don't have such a track record.

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xradionut
They are also one of the players in rise in the price of oil.

It's good to be the king. (Or at least deep capture the media, the
administration and the Congress.)

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to3m
What does FED stand for?

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harryh
The Federal Reserve which is the Central Bank of the United States.

<http://en.wikipedia.org/wiki/Federal_Reserve_System>

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PaulHoule
Sometimes I wonder if the way out of the recession is to declare 401K and IRA
failed policies and just let people have the money and spend it now to get the
economy moving.

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saryant
And then what will those people fund their retirements with?

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scarmig
The money that is moved from a 401k to the market, so they can spend and save
it as they wish. You don't have to spend all the money you make that doesn't
end up in a 401k; in fact, if you do, you're doing it wrong.

The only people whose retirement would be adversely affected are mutual fund
managers.

~~~
philwelch
How about everyone who has to suddenly start paying taxes on the money they're
saving for retirement? 401k is just a tax shield. You want to _raise_ taxes to
_stimulate_ the economy??

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CleanedStar
"The occupy movement rallied against what they perceived to be a rigged game:
a financial system that required their participation but did not offer them a
seat at the table. Then they went home - maybe because the weather got bad"

Occupy Wall Street was cleared out by police starting at 1 AM on Tuesday,
November 15th, 2011. It was done at 1 AM as they only had to deal with people
staying at the park at that time. They arrested 200 people in a well-planned
operation. One of the reasons given for clearing the park was unsanitary
conditions, which I can personally attest was BS - OWS was always sanitary,
and when the mayor began using sanitation as a reason to clear things out OWS
became fanatical about cleanliness. I watched people sweep the same spot of
ground multiple times an hour. Compare that to the parks and recreation cuts
where some NYC parks can go more than a week without any cleanup.

The police pushed back attempts to re-occupy the park in the day of November
15th and November 16th. A more organized effort to get back in the park was
tried on New Year's Eve, and was met by pepper spray, dozens of arrests etc.

While this is the reality, which can be easily verified, I realize there is
this hegemonic false way of thinking. I realize this requires reporting that
OWS were a bunch of trustafarians not affected by Wall Street shenanigans, and
who went home when it got cold. Because to talk about what really happened, as
opposed to the invented ideas of what would happen from someone embracing a
propagandistic model of explanation, would require revealing things which are
not allowed to be revealed.

While I embrace ideas that came out of OWS, I didn't go for the first week or
two even though I knew about it before it happened, because I didn't see how
occupying an area would do anything, and I didn't think people were
interested. On that latter point I certainly misjudged - people from NYC and
surrounding areas who had pent-up frustration about unemployment and the
economy came flooding into OWS. Any how, it's funny how Russian governments or
Chinese governments and their press organs lied, and much of the population
knew its BS, yet the corporate press organs in the U.S. lie and say it got too
cold so OWSers went home, and it is accepted as fact by so many. That the
press lies is not surprising, that Americans are so credulous is what's
surprising. I guess with so much fundamentalist religion among the working
class and a different sort of warped thinking among professionals in the US, I
shouldn't be continuously surprised by this, but I am.

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scarmig
Of all the things that piss me off about OWS, what's probably the worst is
this: our corporate media have somehow foisted some kind of collective amnesia
on us. People ask, "Ugh, I hate our financial sector, and OWS had some good
rhetoric but they just gave up because they were cold, lazy, and bored." As if
one of the biggest domestic displays of government violence in recent times
didn't even happen!

There are plenty of other critiques of OWS that I embrace wholeheartedly--
sites became gathering points for the homeless and hurt more widespread
appeal, new people who went in were not on-boarded effectively--which we can
debate on end. But the idea that one day people just got bored and gave up...
that drives me nuts.

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tptacek
Am I understanding properly that all it took to destroy OWS in the popular
consciousness was to deny them access to a single park?

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wildgift
They were arrested, infiltrated, and attacked at multiple locations, over many
months. They keep coming back, too, but that doesn't make the news. Right now,
they're doing this thing called the Rolling Jubilee.

Also, hundreds of local OWS support protests and encampments happened, and
they got raided, pepper sprayed, etc. just like NYC. Many of them are also
persisting and fighting. One such group is Occupy Fights Foreclosures, which
fights illegal foreclosures.

What is destroying the OWS image is the media, which actively ignores OWS. For
some reason, they'll give a dozen TEA party people news coverage, but a larger
(but still small) OWS protest doesn't get reporters.

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tptacek
Have large numbers of OWS participants been incarcerated?

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jupiterjaz
betterment.com their you're done.

~~~
harryh
there

