Generation-X' Journal

Where are you and where are you going?
Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

ERE begins with retirement


For most people, not much changes in retirement. Unless you are part of the Donald Trumpers (1% of the US population) with at least 10 million dollars lying around (2016*), for most us, retirement simply means trading job for time, with a significant cut in income.

A reduction in standard of living inevitably follows a cut in income. Therefore, for the 99% of the population, the decision to retire must be a careful balancing act, weighed between time and the standard of living.

Time is a formidable enemy. After digging through the financial reports, I now fully grasp the true destructive power of inflation over time, especially spanning over decades.

Our lifetime savings, whatever it maybe at the time of retirement, must be able to provide each and every monthly paycheck, until we expire.

If compounding interest can make millions over decades, then the reverse must also hold true, with compounding inflation destroying millions.

ERE really begins with retirement. Because it is necessary for survival.

Whether they realize this or not, this is what faces the 99% of the population.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual.
Those who cannot remember the past are condemned to repeat it" -- (George Santayana) viewtopic.php?p=202265#p202265

The Roehm affair, with the state openly engaged in mass murder, with the connivance of its old military elite and the endorsement of the electorate, directly foreshadowed the extermination programmes to come.

It was the sheer audacity of the Roehm purge, and the way in which Hitler got away with it, with German and world opinion and with his own colleagues and followers, which encouraged Stalin to consolidate his personal dictatorship by similar means.


Dictator for life': Xi Jinping's power grab condemned as step towards tyranny 2/26/18 [CHINA]
(https://www.theguardian.com/world/2018/ ... r-for-life)

Vladimir Putin just staged a constitutional coup. How will Russians react? 1/17/20 [RUSSIA]
(https://www.washingtonpost.com/opinions ... ans-react/)

McConnell fundraises off impeachment, says effort will fail 'with me as majority leader' 1/16/20 {US}
(https://www.usatoday.com/story/news/pol ... 881997002/)


[ President for life "Maybe we'll have to give that a shot someday" https://youtu.be/09ZCJnf-qMw?t=41 ]
[ "I am the chosen one" https://www.youtube.com/watch?v=js4wcaPqSow ]
[ "I am your voice" https://www.youtube.com/watch?v=ehvUQrRDyyU ]
[ "I am going to be the greatest jobs president that God has ever created, remember that" https://youtu.be/mzbzZwMzU38?t=15 ]
[ "nobody knows more about < insert subject > better than I do" https://www.youtube.com/watch?v=5GqJna9hpTE ]


It is fascinating and yet, terrifying to watch history repeat itself. The difference is, I am now a part of it, instead of watching some documentary about a devastating world event that happened a long time ago.

I have no doubt that people 80 years ago weren't any different from people today, with similar hopes, greed and fear. Most were probably just like us, too busy to pay much attention to anything else other than going about their daily lives, going with the flow. What gave August Landmesser the courage that the masses didn't have? (https://upload.wikimedia.org/wikipedia/ ... a-1936.jpg)

If the world makes through this one, then I hope that people decades from now will learn from our mistakes - and have the courage that we lacked.

Otherwise, So long, and thanks for all the fish.

Image

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

business continuity / employer insolvency (Income - more thoughts)


On financial incentives to continue working


IMHO, the 3 legged stool model for traditional retirement works very well.

In the model, the normal working income is replaced with three smaller income sources in retirement - the pension, social security and savings.

When it comes to timing the retirement, it is a rather difficult decision because there is a strong financial incentives to continue working.

Starting this year, for each year delayed, I can increase the retirement net worth by about 250k/yr, through additional savings and increased pension. This does not account for social security and other incentives.

It adds up to a fairly significant sum and can mean the difference between "barely getting by" versus "being adequate" in later years, when I wouldn't be able to work even if I wanted to. (Yes, those years WILL come)



On pension and social security


I have spent a good deal of time analyzing the pension and the social security and I now have a decent ballpark estimate as to when the possible funding risks associated with the pension and the social security will occur.

The risk in both the pension and the social security were not as dire as the hype that plutocracy driven mass media made them out to be.

This is because both are annuities and the accrued liabilities are not payable on-demand in one lump sum. What's more important is the cashflow. What's being hyped, is the misinformation and the politics.

This much hyped social security insolvency is so "dire" that if the current social security paycheck withholdings were to be raised by 1.5%, then the social security will be fully funded for the next 75 years.

Better yet, by altering the social security withholdings from "pseudo" flat rate to true flat rate, the social security program can continue indefinitely.

The current "pseudo" flat rate exempts the ultra rich from social security withholdings by not taxing them on earnings over $137,700 (2020).

While 97% of the population fully contributes into the system with all of their earnings, the ultra rich 3% only partially contributes into the system with some of their earnings. Why?

Don't the plutocracy and their party of special interest advocate flat rate? Perhaps it is the "pseudo" flat rate that they genuinely love.

This is where misinformation and the hype about social security insolvency and the politics begin. (I'm guessing they want to have the cake and eat it too.)



When it comes to the pension, they have already begun addressing the cashflow issue with benefit changes and the tires will meet the road in about 12-15 years. At that time, the pension income will match the expense.

This provides ample time to recover the cost of pension (bird in the hand) and the worst case expectation is that pension will continue, albeit in a somewhat reduced form.



There are risks. To hedge, I can build addtional savings in the next few years that will allow investing into rental income (housing) and real income (chickens and the vegetable garden). In addition, market investments will be maintained on the side.

Particularly in California, the housing investment makes sense as the foreclosure protection shields other assets. In addition, there is the primary residence exclusion.

By working few years longer, I will be aiming to acquire housing with minimal mortgage to induce positive cashflow in rental income while looking to benefit from primary residence exclusion.

Included in the calculation is the expectation that the housing market will fall along with the stock market while I build savings in the next several years.



This should complete the income planning:

Social Security
I-Bonds/TIPS - i.e. inflation protected CASH generating interest
Job-Pension pair
A House/Rental Income
The Stock Market
A Real/tangible income generating assets (a vegetable garden, chickens that lay eggs etc.)

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Healthcare


Until Patient Protection and Affordable Care Act became law in 2010, the way most people acquired and maintained healthcare coverage in life was to have a job and work until Medicare at age 65.

ACA changed this in 2010. In fact, ACA perfectly suited ERE because the cost of healthcare was entirely based on income and not on net worth.

If one could adjust to a reduced standard of living of no frills essentials, not only would the required savings needed to sustain life be less, it also opened the door to having a real healthcare coverage for life.

This was a trifecta. It finally provided an option of early retirement for the masses, especially for those who were willing to sacrifice material wealth over freedom - something that only the rich could afford to do before.

That is until Trump came along and became a boon to the Republicans, especially McConnell and Graham, the party of special interest working hard for the oligarchy hell bent on eliminating the so called "entitlement programs" - Patient Protection and Affordable Care Act, Social Security and Medicare.


Trump's Second-Term Plan For Social Security: Starve The Beast
https://www.forbes.com/sites/teresaghil ... dd2a237949
Image

Mitch McConnell
https://www.latimes.com/business/story/ ... l-security
https://www.newsweek.com/deficit-budget ... nt-1172941
Image

Lindsay Graham:
https://www.cnbc.com/2015/10/15/what-il ... ntary.html (I usually refrain, but I must say this - imo Lindsay is full of it)
https://crooksandliars.com/2019/07/lind ... l-security
Image


These social safety net were the result of the harsh lessons we learned after paying for the consequences of the Great Depression with much hardship and suffering.

Those who were there, lived and bled through it, enacted many safeguards in hopes of protecting their children and the future generation from having to go through what they just went through.

Call it an "entitlement program" if you will, but that's an easy pill to swallow for those with millions and billions of dollars in the bank.

Donald Trump - 3 Billion (https://www.forbes.com/donald-trump/#174723b82899)
Mitch McConnell - 22.5 Million (https://en.wikipedia.org/wiki/Mitch_McConnell)
Lindsay Graham - 5 Million (https://www.wealthypersons.com/lindsey- ... 2020-2021/ -- a note worthy public comments section)

Why should the rest of the country, allow these 1% ultra rich politicians to alter the course of our nation and change the social safety net that our great grand parents set forth, in hopes of preserving their children's future, and paid-for with their blood?

For whose prosperity, security and well being are these cuts for?
(As the rich get richer, more workers are serving their needs: https://www.bostonglobe.com/business/20 ... story.html)

IMHO, this is a question for every generation.

Because freedom is something that everyone aspires to, not just the rich 1% - and even to those who aspire to ERE.

"Live Free or Die", indeed.
Last edited by Generation-X on Wed Jan 22, 2020 5:56 am, edited 1 time in total.

ertyu
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Re: Generation-X' Journal

Post by ertyu »

my thoughts are with your country man. they're not gonna govern me, i'm not american, but i don't wish this shit on anyone

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

When I wrote that journal what I had in mind was retirement planning. It was on the front pages today:

'Hobnobbing With Billionaires in Davos,' Trump Admits—If Reelected—He Will Seek to Cut Social Security, Medicaid, and Medicare
https://www.commondreams.org/news/2020/ ... cut-social


The left-right political rift is nothing but a smoke screen. This is what they're clearly after. ;)

(Translation: serve us, until you drop)

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Lemur
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Re: Generation-X' Journal

Post by Lemur »

@Generation-X

Really hoping this is the year that Americans can wake up and vote out a pathological liar....
https://twitter.com/realdonaldtrump/sta ... 44?lang=en

I'm embarrassed that this is the leader of our country. Literally plunging us into fascism, authoritarianism, and undermining Democracy on a day-to-day basis. History sure does repeat itself.

Anyhow....looking ahead. Politics is one of the most complicated subjects I've ever studied. At least in my case, I am always conflicted not between left vs right or socioeconomic class warfare, but between idealism and pragmatism. Real institutional change needs an idealist vision but often doesn't lead to real-world results in the legislature. For instance, Bernie...I like his vision but practically I cannot see him getting anything done in Congress. Andrew Yang is a favorite but likely doesn't stand a chance. Amy Klobuchar actually seems like the most practical choice and doesn't have any sort of baggage that I am aware of. I hold neutral opinions on the rest of the candidates though Biden seems off to me (which my views here are is in-line with similar demographics...I wonder why).

What are your thoughts when you're looking at potential US candidates or even your local politicians? Do you have a favorite candidate at this time?

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Couldn't agree with you more. "Don’t steal, don’t lie and don’t cheat. Republicans hate competition." :shock: LOL, Ok seriously..

Leaders make all the difference, in most situations that involve many people. (One can relate I'm sure, at work etc. :roll:)

We are fortunate that we can choose a few and try them out for a while in our lifetime.

Probably a good indicator of a person is to go by their character ("the mental and moral qualities distinctive to an individual") and personal values (for example, Shackleton's - optimism, patience, idealism, courage and "By endurance, we conquer") because while people change, these change slowly.

Ladies can probably better relate but imagine if you are being wooed by multiple potential suitors. How do you pick a good one? :D

Their background (family, religion, life experiences), potential (capabilities), values, personality, respect along with shared partnership and interests probably come to play.

Since choosing a candidate is not unlike speed dating, comparing what they say against what they do should be a good indicator. The bar is so low with the Republicans right now, it's hard to get this wrong, even for a child.

But one must also consider the overall picture as well. What I have noticed over time, given the two-party political system that we have, is that our system tends to work well when there is a separation of power with one party taking over the Congress and the other the Executive, minimizing collusion.

Because then, they tend to dialogue and come up with a compromise because they have to go home at some point.

What are your thoughts when you're looking at potential US candidates or even your local politicians? Do you have a favorite candidate at this time?
I tend to lean conservative (the true conservatives with morals and decency, not the current ones) politically, especially over finance and tend to lean moderate over social programs because I believe that everyone deserves a second chance, so long as they don't abuse the system and payback what they borrow once they're up again. You don't kick a man that's down.

Life is a balance, and most everything is a compromise. Only the children want things their way.

to be continued

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Continued
What are your thoughts when you're looking at potential US candidates or even your local politicians? Do you have a favorite candidate at this time?
It is morally right to provide aid to those in need, but there shouldn't be an expectation that it is for life.

Likewise, it is the society that places the burden of children onto the parents with complete responsibility. Therefore, it makes sense that the society place a similar burden of elderly onto the children, as adults - to make things whole. There shouldn't be an expectation that life is free.

The so called "entitlement programs" of Social Security and Medicare, as coined by these unsophisticated conservatives that are twisting the truth, undermine the intent of these programs to benefit the society as a whole, while establishing fairness. One can only imagine the train wreck in a society that only sought after pleasure and did away with responsibilities.

Unfortunately, the current so called "conservatives" are not only unethical, they are as fake news as Trump himself. I threw my vote away in the last election, but after watching the consequences of my actions, for the first time, I will vote Democrat in the next election.

I can live with Biden. But in earnest, I can live with Warren, Yang or even Sanders.

Given the current economy, I believe it will be a tall order but to me, the country is far more important than any political party - and I'm going to throw my vote away again, but in the right direction this time.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Taking the first step towards the transition


I have found a room. I will be ending the cost of living budget experiment at the end of this month and move out of the apartment.

The place I will be moving into is a bit unique, in that it is similar to a hostel, but with a private room and shower. It is a group living but with separation - very much similar to the new apartment complexes that cater to college students but run by a private person.

It's been decades since I've had "roommates", not since college. Most are college students. :lol:

When this new lease is over, I am hoping to hit the road on a multi-year road trip to experience all of the national parks in the continental United States. This will be the place where i will be working to configure the next hybrid mini-van (or prius) for the trip.

The move will eliminate the cost for internet, electricity and gas as they're included. The monthly rent will be reduced by a third. These savings will go toward the mega backdoor roth to exceed the annual contribution limit as much as possible.

I am planning to stay largely rent free during the multi-year road trip, with occasional hotel stays, while building a foundation for a rental income here at home. When I return, it will be converted to a primary residence for a possible shot at the home sale tax exclusion, if it still exists.

I am hoping that all of my evening class education (the last was on taxes) will finally bear fruit and produce some real income at some point. :mrgreen:

Things are starting to get interesting.

wolf
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Re: Generation-X' Journal

Post by wolf »

Wow, that sounds exciting. A multi-year road trip in the States sounds really good. That would be also one of my ideas if I lived in the States. Will you work and earn some income during your next phase of life?

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

While there are no guarantees in life, the plan is not to work when it happens.

I will be utilizing the traditional three legged retirement model using pension, social security and savings to have a monthly income floor. So there will be a consistent monthly income during retirement.**



**I've already spent some time assessing the benefit over cost and the solvency risk and it appears that the solvency risk will be lower than the investment risk in the market for at least the next decade, and possibly longer.

This is because the solvency risk in pension is based on assets that already exist, along with income from future worker contributions. Likewise, the solvency risk in social security is political and not fiscal - a class warfare being engaged by the ultra wealthy onto the masses using special interest groups such as the current Republican party and the media, which they own.

In contrast, the future market return is unknown. We are in an uncharted territory, in a bubble of historic proportions. And the fed doesn't appear to be willing to stop the helicopter drop - https://finance.yahoo.com/news/inflatio ... 15436.html

classical_Liberal
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Re: Generation-X' Journal

Post by classical_Liberal »

The trip across the US is something the GF and I have been wanting to do for while. Also thinking of a minivan retrofit for that specific purpose. We are thinking about doing it across two different summers, and maybe wintering during the worst of it in a more permanent residence, taking a 3 month contract to replenish funds. I'm jealous, your trip sounds like it's just around the corner.

I'm curious how you were able to find such living arrangements. They seem so few and far between, I've looked for stuff like that in the past and had very little luck finding it.

I meant to comment on your last couple of posts about your seeming confidence in social security, it didn't seem to play well with your other views, but now that you've explained it vs the risk of other investments it makes a lot more sense. wrt to the fed policy, it seems to me if they are really so focused on inflation, they should try other measures. Obviously QE and low rates have only managed to create asset inflation. How can such smart people think more of the same would do anything else? If they want price inflation, they need to get the monetary supply into the hands of middle class consumers, increase velocity. Do you have any opinions or predictions on this subject?

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

That sounds like a wonderful idea, breaking it up in parts, I plan to do something similar. The idea is to go in stages, slowly easing into the transition from a permanent to a traveling lifestyle. It will take a couple of years, to get the vehicle ready and test it out with semi-long term trips, make adjustments, etc. I will also be watching the real estate market in the mean time for an opportunity to get the rental ready and so forth. This new living arrangement will be a transitioning test bed.

I was able to find this new place through a scuttlebutt. People are people, and usually I prefer to just talk to them and ask. I was able to meet the owner and it turned out that the owner was looking for tenants for a new project. I had been searching for months and then it just happened. A fairly common happenstance in life I suppose.

My opinion and the predictions are the same, I do not believe it will end well. The decade long zirp has driven all fiat assets (bonds, equities, real estate) to record highs and thus made money essentially worthless. Clearly, this does not bode well for those that start life with nothing, after high school or college - which are the majority of people. In my day, a millionaire was a rich person. Now, you need to have around 4 to 5 million dollars, inflation adjusted. The problem is, this is a very difficult goal to achieve, for those of us that are starting with nothing.

And to pour salt in the wound, the ever greedy ultra rich are effectively using the political system to undo their fair share contribution responsibilities to the society and have even managed to turn the tables by having the society support them (!).



Here's an interesting article: https://www.scientificamerican.com/arti ... nevitable/

The Inescapable Casino - A novel approach developed by physicists and mathematicians describes the distribution of wealth in modern economies with unprecedented accuracy.


Here is a layman's explanation of the article: https://www.irishtimes.com/news/science ... -1.4088489

An amazing article called The Inescapable Casino, written by mathematician Bruce Boghosian of Tufts University in the November edition of Scientific American, merits great attention. Boghosian and others have developed a mathematical model that accurately reproduces real-life wealth inequalities in a wide range of free-market countries.

This model also shows that in a pure free-market economy, ie in the absence of wealth redistribution mechanisms, all the wealth inevitably falls into the hands of one or a few people (an oligarchy).


Startlingly counterintuitive

The mathematical demonstration that a pure free-market economy concentrates almost all wealth in the hands of a few, regardless of the industry or cleverness of the rest, is startlingly counterintuitive. Wealth redistribution is therefore absolutely required on scientific grounds, not exclusively on ethical-philosophical grounds, in order to set limits on inequality and to give everyone a chance to thrive.

So much for the traditional notion, popular in some quarters, that redistribution of wealth is soft-hearted generosity that panders to the lazy and the shiftless and penalises the clever and the industrious. In the absence of redistribution almost everybody suffers grievously, the lazy and the industrious alike.


Here's an interesting recent video: https://twitter.com/DrRobDavidson/statu ... 0713161728
Doctor confronts Vice President Mike Pence over Medicaid cuts in Iowa

At least not all of us are asleep.


Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Futures is pointing to a lower open tomorrow.

It appears it will be another roller coaster day.

ertyu
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Re: Generation-X' Journal

Post by ertyu »

Generation-X wrote:
Mon Feb 24, 2020 1:15 am
Futures is pointing to a lower open tomorrow.

It appears it will be another roller coaster day.
Is it GDX time, I wonder. Supply chain disruption might lead to stagflation. Thoughts?

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

So far, it's only a little over 3% market drop. I'd much prefer to see closer to 5%.

Long term bond rate is dropping and gold is moving higher. Jobs are still great however.

Will need to see what the Fed response is going to be - will they cut? Otherwise, yes, possible inflation or stagflation.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Currently long SPY calls for the bounce. Leveraged a bit and in hindsight probably should not have, we'll see.

Will be watching out for an exit and reversal (probably soon by the looks of it) and will be shorting.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Cashed in and left about 10% on the table. Depending on the market reaction tomorrow, will be looking to buy some calls, starting out small.

Will be looking at 25.5k as the first test then 24.8k. Will have to see where it takes us. Could get interesting tomorrow.

Gold will move in tandem with the market because it is commodity first then inflation hedge second. Until the fed response kicks in, it should fall together with the market - until the next ZIRP, TARP and possibly NIRP that is.

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