MONEY: Financial planning with old memes

Sunday, October 21, 2012

http://www.businessinsider.com/the-coming-retiree-crisis-2012-10

Take Action Now To Prepare For The Great Retiree Crisis

Jeff Voudrie, See It Market | Oct. 10, 2012, 8:30 AM

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The financial planning community has largely relied on assumptions regarding equity, debt and inflation percentages that have been experienced over the last 30 years.

There are 3 problems with these assumptions:

Equity returns the last 30 years have been extraordinarily high as a result of the longest and greatest Bull market in the history of U.S. stock markets. Accordingly, many financial plans used projections that assumed equity returns of 8-10% a year.

Debt returns over the same period are equally skewed. Remember the double-digit interest rates of the 1980’s? In 1989, as a young broker, I was selling 30-year TVA bonds yielding 10%! Financial plans the last 5-10 years have used interest rate assumptions around 5-6% a year.

The scenarios that led to the historic markets the last 30 years are very unlikely to EVER be repeated in today’s retiree’s lifetime. And those who are taking distributions based on these outdated assumptions may soon run out of money.

For instance, let’s assume that someone retired 5 years ago at age 60 with a $500,000 investment portfolio. Based on financial plans popular at that time, the retiree is taking $2500 a month in distributions—money they need to maintain their current standard of living. Since the plan anticipated the ability to average a 7% return on a portfolio with close to 50% in equities, the retiree expects to be able to take those distributions and never run out of money.

Adjusting those assumptions based on what many believe resembles more reasonable assumptions going forward requires decreasing the rate of return assumption for a similar-risk portfolio to around 4% and increasing the inflation assumption from 1-2% a year to 3-4% a year (which may still be too conservative). Suddenly, the portfolio that should last forever is now projected to be exhausted in only 16.8 years! That means that the entire nest egg and what it earns cannot sustain the current withdrawal rate. Since the retiree started the withdrawals five years ago, now they are down to 11.8 years—running out of money around age 76!

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Clearly, the political class has screwed up the American economy.

Pity the poor, the elderly, the middle class, those on fixed income.

Inflation is grossly understated by the “official” stats.

Are we headed to be like Europe or pre-WW2 Germany?

Clearly, everyone needs to update their financial plans.

I’ve recommended to my turkeys that they adjust their “money reserve requirements”.

Everyone better plan to work for a longer time.

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RANT: “Big Church”, another failed concept

Thursday, August 18, 2011

http://www.catholicnewsagency.com/news/diocese-of-orange-raises-bid-for-crystal-cathedral/

Diocese of Orange raises bid for Crystal Cathedral
By Marianne Medlin

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Garden Grove, Calif., Aug 11, 2011 / 05:59 am (CNA).- The Diocese of Orange upped its previous bid and signaled openness to new negotiations for the Crystal Cathedral after board members recently announced that the building is no longer for sale.

*** and ***

The liturgist for the Orange diocese, Monsignor Arthur Holquin, said July 26 that several changes would need to take place in order for the Crystal Cathedral to become a Catholic worship space.

Along with a central altar, a tabernacle and a baptismal font, the building would need a “cathedra” or bishop’s chair. While renovations are needed to the building, “not much deconstruction would be required and the iconic personality of the original architecture and design would, for the most part, be retained,” he said.

Purchasing the Crystal Cathedral is an attractive option for the diocese because it provides an instant solution to its building needs and would cost roughly half the $100 million price tag for the planned Santa Ana cathedral.

Though the diocese made an official $50 million bid for the Crystal Cathedral on July 22, the church’s board later voted against selling it and decided to appeal to church members and viewers to donate the funds instead.

*** end quote ***

Guess I just don’t understand.

Couldn’t God be worshiped in an appropriately decorated warehouse?

As far as the “bishop’s chair”, I have a old folding chair to donate. Won’t that hold a butt.

$100M$?

Reminds me of the French’s Maginot Line and Patton’s famous apocryphal remark “fixed fortifications are monuments to man’s stupidity”.

Maybe a cathedral is marketing? Of an idea who’s time has past. “Big Church” must join the dustbin of failed concepts like: Big Gooferment, Big Oil, Big Pharma, Big Labor, Big Biz, “Too Big To Fail” (2B2F), Social Security “Insurance”, the misnamed Federal Reserve Bank, Wall Street, Fiat Paper aka “monopoly money”, and all such stupidity?

It’s always sad when the illusions and delusions die. And all we are left with is the wreckage.

Is it too late to rebuild from the pieces?

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INTERESTING: Should College Athletes Be Paid?

Sunday, July 31, 2011

http://www.doughroller.net/personal-finance/should-college-athletes-be-paid/

Should College Athletes Be Paid?
by MICHAEL
in PERSONAL FINANCE

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It seems every week, I hear of a new scandal involving a college athlete and the reason is always the same … money. For the past few months, the NCAA has been digging their claws into USC and Ohio State, two of the most storied athletic institutions there are in college sports. The consequences of these schools not playing fair have been the loss of championships and current coaching staff members and many in and out of the sport wonder if the simple solution is to pay college athletes for their performance. I vote a big, fat, NO.

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I disagree.

The Colleges get rich. The coaches get rich. The “industry” surrounding them get rich.

The players MAY get an education.

(I guess they always get an education. Getting screwed is educational.)

Some of the sports are amateur; not the “big” ones.

And, if the athlete gets a career ending injury, then they are screwed.

Would seem like there needs to be a athlete’s union!

I think they should get a percentage. It’s the American way.

# – # – # – # – # 2011-Jul-24 @ 11:00


TECHNOLOGY: CISCO does evil with Gooferment help

Thursday, July 28, 2011

http://arstechnica.com/tech-policy/news/2011/07/a-pound-of-flesh-how-ciscos-unmitigated-gall-derailed-one-mans-life.ars/1

A pound of flesh: how Cisco’s “unmitigated gall” derailed one man’s life

By Ian Mulgrew

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In May 2011, nearly a year to the day after his deposition and arrest, Adekeye was vindicated. In a stinging decision, British Columbia Supreme Court Justice Ronald McKinnon rebuked both Canadian and American authorities for an appalling abuse of process and, in a rare move, he stayed extradition proceedings against Adekeye.

Justice McKinnon was stunned that a trivial $14,000 civil tort had been transformed into a criminal proceeding so as to engage the full might and resources of two governments and to mislead one of Canada’s senior trial courts. It was shocking, he said.

The justice dismissed three thick volumes of legal precedent filed by Canadian federal government lawyer Diba Majzub, who said that it didn’t matter if Adekeye was falsely characterized. At the end of the last century, after several high-profile requests dragged on for years (some as long as a decade), the government changed the Extradition Act to make the court’s job little more than that of a rubber stamp. It was America’s job, said Majzub, to rule on the merits of Adekey’s case—not Canada’s.

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Seem like anyone dealing with CISCO should be very careful.

Unlike Google’s “Don’t be evil”, CISCO seems to have a different ethic.

So, ostracize CISCO?

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RANT: “Default”? No way, not needed

Tuesday, July 12, 2011

As a political junkie, I’m enraged when some bozo (i.e., politician and /or bureaucrat) is allowed by some talking head to say “default” without opposition.

IMHO any reasonable person would pay the interest on the debt first, then the social security and other mandatory welfare payments, and come up with a “total must pay”. Subtract that total from the budget to come up with “what’s left to pay”. Subtract “total must pay” from current receipts for “what’s left”.

Divide “what’s left” by “what’s left to pay” and that’s the haircut that the budget must be slashed by.

No one is going to be happy, but no default. It’ll set off a lot of wailing and gnashing but that’s what fiscal discipline is all about.

That’s why I say don’t raise the debt ceiling. And, don’t let politicians and bureaucrats scare old people by saying no soc sec or the markets by saying default.

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INTERESTING: What would you do with Jeter’s ball?

Monday, July 11, 2011

http://sports.yahoo.com/mlb/blog/big_league_stew/post/Fan-returns-3-000th-hit-to-Jeter-team-rewards-h?urn=mlb-wp12123

Sat Jul 09 03:48pm EDT
Fan returns 3,000th hit to Jeter, team rewards his generosity
By ‘Duk

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As a 23-year-old cell phone salesman, Christian Lopez had thousands of reasons to hold out for the highest bidder on the baseball from Derek Jeter’s(notes) 3,000th hit. In fact, some estimates put the ball’s worth at $250,000, money that the recent graduate from St. Lawrence University could have certainly used.

And yet when New York Yankees officials found Lopez after he corralled Jeter’s historic home run, the only thing that the big Yankees fan wanted was to return the ball to the man who had hit it.

*** and ***

What would you have done?

*** end quote ***

Wow, that’s a tough one.

I doubt I’d have been as gracious as this fellow.

I’d hope that I’d tie two baseball stories together.

Remember that fan who fell to his death leaving his son an orphan?

I’d have gotten my favorite lawyer to negotiate a deal. The fair value of the ball should wind up in the Texas Rangers’ account that was setup for the child and Jeter should get the ball. And, how it all happens are mere details. Since I had possession of the ball, I’m sure it could all be worked out.

I hope I’d have the stones to make it happen.

That’s what I think I’d have done. Or, what I’d like to THINK that’s what I’d have done. It’s what I HOPE i’d have done.

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RANT: The first item first column on Drudge says it all

Sunday, March 20, 2011

The first item first column on Drudge says it all.

*** begin quote ***

MARCH 19, 2011

OBAMA: ‘Today we are part of a broad coalition. We are answering the calls of a threatened people. And we are acting in the interests of the United States and the world’…

MARCH 19, 2003

BUSH: ‘American and coalition forces are in the early stages of military operations to disarm Iraq, to free its people and to defend the world from grave danger’…

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Donna Nobis Pacem!

Would anyone like to go back to the last Presidential campaign? I said here and vocally that the only truly “Peace” candidate was Ron Paul. Everyone told me that BHO44 was that “Peace” candidate.

“barbara streisand”

I told you so. And, it gives me no pleasure to say that. If I was smarter, I would have been more persuasive. But, when I say there is no difference between the R’s and the D’s, everyone tells me there’s a difference. Look at “today’s conservatives” and “today’s liberals”?

Where do we get the moral authority, let alone the Constitutional authority, to wage war on Libya?

IMHO from a moral, strategic, and tactical basis, this is an outrageous disaster.

So what are you going to do about it?

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