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DNK posted:The only reason to not take a risk-free 9% is: 3 months, not 6.
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Oct 24, 2022 16:35
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Thanks all, edited.
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Oct 24, 2022 17:20
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Thanks, I decided to do the IBond thing. The website was very slow and possibly handling an obscene amount of traffic today.
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Oct 24, 2022 21:14
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Regarding term life insurance does it make sense to “ladder” policies for declining risk over time? Obviously your risk of dying increases over time, but I should be able to save more and self insure over time too right? I’m thinking of the following as a 32 year old looking to probably get married and start a family in the next couple years. Policy 1: 10 year term, $1mm face value. Policy 2: 20 year term, $1mm face value. Policy 3: 30 year term, $1mm face value. This way if I eat poo poo like right away people get $3mm, but over time as I build wealth it declines, and more importantly the annual premiums are hypothetically lower since the shorter duration terms should be cheaper right?
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Oct 24, 2022 21:33
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Harveygod posted:While on the topic of I-bonds: A brief look suggests you there is no holding time limit for holding giftbox I bonds. More info here: https://thefinancebuff.com/buy-i-bonds-as-gift.html
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Oct 24, 2022 21:35
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tumblr hype man posted:Regarding term life insurance does it make sense to “ladder” policies for declining risk over time? Obviously your risk of dying increases over time, but I should be able to save more and self insure over time too right? Yeah, laddering can make sense, and yeah at the end of 30 years you should have enough assets you don't need life insurance anymore. Like everything, it depends a lot on your situation. That could be way too much insurance, or not enough.
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Oct 24, 2022 21:47
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CmdrRiker posted:Which seems like a better thing to do, the ~9% for 6mo I Bonds for a year or so, or buying more risky stocks during the bear market? If you want to protect cash savings against inflation in the short-medium term and are okay locking it up for a bit you should put it in the i-bonds If you want to increase your investment in your long term/retirement savings you should buy the stock (assuming "risky stocks" just means index funds and not actual stock picking) I-bonds aren't comparable to buying stock they're much more comparable to cash or CDs or whatever. They're good and investing in the stock market for the longer term is good, but those aren't the same.
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Oct 24, 2022 23:42
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I have a ladder of term life policies, but one additional thing to consider is that inflation is naturally reducing the real value of the payout(s) over time in a way that can be very significant on these timescales.
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Oct 25, 2022 00:37
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Harveygod posted:While on the topic of I-bonds: Treasury Bonds are particularly good for the grand parental use. The interest they earn isn't taxable if used for qualifying education expenses.
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Oct 25, 2022 03:02
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(For the States) It has been reported this year that millennials are expected to receive 20% less social security than is presently being offered to retirees. I read an article that said something like "millennials need to save an extra $33 a week to make up for it!" And, personally, I think it is just great that no one is talking about raising IRA/401k caps for the millennial/zillennial generations within certain income ranges to at least give us a tax advantaged way to start preparing for it. Of course it is just as useless to complain about that as it is to complain about legislation to protect the future of the Earth itself.
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Oct 26, 2022 15:49
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CmdrRiker posted:And, personally, I think it is just great that no one is talking about raising IRA/401k caps for the millennial/zillennial generations within certain income ranges to at least give us a tax advantaged way to start preparing for it. What do you mean here? Can you give an example?
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Oct 26, 2022 16:07
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skipdogg posted:What do you mean here? Can you give an example? Simply put, if there will be "less social security for future generations" why aren't legislators talking about A) future plans to fund that difference that is being estimated or B) legislators admit "wow, that's a problem for future generations retiring in the States. We don't have a solution right now, but here... have higher limits on your tax advantaged retirement contributions that can make up for the estimated -20% difference in the future."
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Oct 26, 2022 16:17
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Every company is bitching about how "nobody wants to work anymore!". Do you think any politician is going to be allowed to do anything to help people retire?
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Oct 26, 2022 16:22
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SS was designed to be pay-as-you-go. So in my mind, in 40 years when millennials start retiring, if SS needs more funding then SS taxes should be raised at that time to make up for it, as as it should now. What I never understood was why SS taxes have a cap (and such a low one relative to high income earners) and isn't progressive.
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Oct 26, 2022 16:23
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totalnewbie posted:What I never understood was why SS taxes have a cap (and such a low one relative to high income earners) and isn't progressive. Putatively, because benefits have a cap, but maybe that argument will stop being convincing in our lifetimes.
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Oct 26, 2022 16:39
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There are a ton of simple fixes to social security that could solve the 20% issue, all of which can be enacted instantly with the stroke of a pen, which is why nobody cares to solve this issue in the immediate term: Raise the wage cap. Raise the payroll tax slightly. Increase retirement age slightly. Allow the fund to invest in securities other than treasuries, like every other pension and sovereign wealth fund on earth does (although to be fair once the fund is depleted this won't have any effect). Shatter the illusion that social security is somehow separate from general federal spending and allow it to deficit spend.
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Oct 26, 2022 16:39
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totalnewbie posted:SS was designed to be pay-as-you-go. So in my mind, in 40 years when millennials start retiring, if SS needs more funding then SS taxes should be raised at that time to make up for it, as as it should now. Very high earners will hit the bend points even with a cap after relatively few working years, so the cap could be seen as a benefit to them if th marginal benefits post-second-bend-point are less than what they'd otherwise be able to get. And maybe there's an assumption that high earners would have less of a reliance on using it?
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Oct 26, 2022 16:42
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Eyes Only posted:There are a ton of simple fixes to social security that could solve the 20% issue, all of which can be enacted instantly with the stroke of a pen, which is why nobody cares to solve this issue in the immediate term: You're right, this sounds way better.
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Oct 26, 2022 16:43
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CmdrRiker posted:have higher limits on your tax advantaged retirement contributions that can make up for the estimated -20% difference in the future." Ok, I get that, but I'm not sure how that would help the average person whose social security is going to make up a large part of their retirement income. Someone making 60K a year right now can't reasonably come close to taking advantage of the current 401K limits. A disciplined saver might be able to sock away 6K a year in a roth, but I'm not understanding how increasing the limits will help the average american.
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Oct 26, 2022 16:46
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skipdogg posted:Ok, I get that, but I'm not sure how that would help the average person whose social security is going to make up a large part of their retirement income. Someone making 60K a year right now can't reasonably come close to taking advantage of the current 401K limits. A disciplined saver might be able to sock away 6K a year in a roth, but I'm not understanding how increasing the limits will help the average american. It won't, it might help the rich but not wealthy, which is largely what this thread appears to be made up of. They could massively increase the limits on the savers credit, and that would help but lol.
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Oct 26, 2022 16:49
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skipdogg posted:Ok, I get that, but I'm not sure how that would help the average person whose social security is going to make up a large part of their retirement income. Someone making 60K a year right now can't reasonably come close to taking advantage of the current 401K limits. A disciplined saver might be able to sock away 6K a year in a roth, but I'm not understanding how increasing the limits will help the average american. It was just my initial small brain reaction to an article that advised, "Social security is going to run out so save more!" "Bitch, save more? I'm already saving as much as I can within the limits permitted to me by the govt. GTFO with this 'save more' poo poo."
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Oct 26, 2022 17:07
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raminasi posted:Putatively, because benefits have a cap, but maybe that argument will stop being convincing in our lifetimes. CubicalSucrose posted:Very high earners will hit the bend points even with a cap after relatively few working years, so the cap could be seen as a benefit to them if th marginal benefits post-second-bend-point are less than what they'd otherwise be able to get. Oh for sure this is the simple argument, but I don't know why that matters. SS isn't (or it shouldn't be) your individual retirement savings. It may be based on your earnings (which I think is a little hosed because you more or less get punished if you've been struggling your whole life), but the whole point of social security is that it socializes your retirement income. To that end, it just makes sense that there should be more wealth redistribution from the rich to the poor, which of course means increased or better yet, no income cap, progressive rates, etc. And frankly, I'd love to see it also on capital gains, because so much income for the very wealthy come from capital gains rather than what's on a W2 or whatever. To bring it back to long term savings: go buy I bonds before the rates change if you can. It's just so good.
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Oct 26, 2022 17:20
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Eyes Only posted:
You can't actually do this one without dramatically raising taxes to make up for the lost funds that would be diverted to pay for it. That would probably crash the economy. The rest are doable though.
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Oct 26, 2022 17:25
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I do think the maximum contribution to an IRA should be the same as the maximum contribution to a 401k, and the two should not be exclusive of one another, and the only role the employer should have is contributing to an employee's retirement and not effectively choosing (limiting) the choices they have to invest in. In other words, everyone gets an IRA with 30k of annual contribution space and employers can choose to contribute to it as an employee benefit or whatever. Currently people who work for small businesses, contractors, etc. only have the IRA and not the 401k and that does limit the tax-advantaged space they can access. But that's all about encouraging people who earn enough to be able to save money, to do so, and giving them really a huge tax benefit as an incentive. If your policy as a country is to encourage people to save, it is dumb to only encourage people who work for larger employers to save with a 23k cap and encourage people who don't have that option with a lower 6500 cap. That doesn't address social security, which is supposed to be there for people who can't save enough irrespective of who they work for or how much they make. It scales based on lifetime earnings so it's still a larger benefit to people who had higher salaries, and I'm not sure if that even makes sense... as a matter of policy it's to everyone's advantage to not have people living in abject poverty, so a minimum level of income for everyone, even people who only made minimum wage, or who didn't work for a while, would be best... but that doesn't even have to be SS, a basic income is a separate idea and something I favor although I understand its controversial. But anyway the basic problem with social security is that it's a government debt obligation, not a savings account, e.g. SS just buys bonds so the government can spend the SS deposits as they come in, and we have a demographic bubble where there will be a decade or so that we have too many retirees owed too much vs. the amount projected to be coming in from workers. And since that bubble is temporary, it could be fixed entirely by borrowing. I'm in favor of raising the cap, e.g. if you make 200k you should still be paying ss on all 200k, but I'm generally in favor of raising taxes on the higher earners for a variety of reasons, but Eyes Only ran down several other options. Medicare is the far, far larger and more imminent problem. Medicare Part A is going to be 10% short of its debt obligation starting in 2029, according to projections from this year, and if it's not fixed, it starts falling behind on payments and more hospitals and clinics etc. will opt to stop accepting medicare, which is a thing they're allowed to do. My worry is that deadlock leads to inaction because the system can still limp along, dropping providers and becoming less and less available to the people who need it, without being quite as visible as a month where the government just can't send out the total social security money everyone's owed. But Medicare is very complicated, with parts B through D, and there's things like setting a cap or negotiating lower drug costs for part D and shifting that money into part A that congress could do to shore it up. In the longer run, it needs to raise more money or cut benefits, and that's the same as SS, but the dollar amount of the shortfall is IIRC much larger. Here's a deep look at the numbers, which a lot of news articles are based on (and many get wrong in the fine points): it's the trustee's annual report. https://www.ssa.gov/oact/trsum/
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Oct 26, 2022 17:46
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Social security panic reporting is an evergreen topic It resurfaces over and over for my whole life. I don't know offhand why it comes up, seems like it ties to some event or other crisis. I'd suspect it ties to poor stock performance. Two things I know about it. It's too important to eliminate. And it can't be privatized. What would happen to the market if you tried to invest 2.8 Trillion dollars? There's nowhere to put it. It's not a bad move to invest as much as you can afford personally for your own safety. It's not worth losing sleep over.
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Oct 26, 2022 18:21
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skipdogg posted:not sure how that would help the average person As with anything in politics, specifically American, they are not caring about the average person or pushing legislation to them. It’s a feature and purposeful to keep money and power concentrated upward. Both political parties are guilty. It’s essentially a monopoly. If you want to be technical we basically are in a Corporatocracy Anyway, that all sucks and is depressing. In terms of this thread , which is "best ways to work with the poo poo system we got," yeah that’s why there’s the flow chart I guess. Like, I’m in a better position than a lot of people (make a decent enough living) but I’m def not close to "fund all tax advantage spaces" for my wife and I. All you can do is save as much as you can , without also going Mr Money Mustache and making your life miserable by focusing solely on savings and cost cutting (unless that’s your thing I guess , which if so sure). I save not even thinking about social security, who knows what it’ll be in 30-40 years. It’s just not worth worrying about IMO.
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Oct 26, 2022 18:22
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StormDrain posted:Social security panic reporting is an evergreen topic It's because it's one of the ways that congress can play games with budgets and financial things, and it's not really set up correctly in the first place because when it was set up markets and economics were less sophisticated. So now it perennially has problems because it needs nudges from time to time as reality diverges from expectations. At the same time most citizens are extremely financially illiterate and the media fuels that with disingenuous reporting, and the incentives are just not aligned correctly. So it's always going to come up as an issue. StormDrain posted:Two things I know about it. It's too important to eliminate. And it can't be privatized. What would happen to the market if you tried to invest 2.8 Trillion dollars? There's nowhere to put it. Some theorize that part of what drove the 2008 crisis in the lead-up during the oughts was the increase in the global money supply and particularly people with savings looking for a return, so investment vehicles were created to meet that demand. That being said, they don't have to dump 2 trillion into the market in one day. They could say, announce they're going to do some quarterly and what they're going to do with it, and buy things from Goldman Sachs so they can front-run the US citizenry.
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Oct 26, 2022 18:28
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I think the reason why it keeps getting brought up is A) smaller population is supposed to be contributing to the benefits of a larger population with their income taxes and B) smaller population is still angry about wages and very much antiwork so less there are less working class taxes and C) who knows how the future will turn out, but extrapolating from our current situation with less people, less wages, less workers, and less income tax... it looks really loving lovely.
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Oct 26, 2022 18:40
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How would the benefit compare for a dollar paid in FICA tax vs a dollar put in an IRA/HSA? I guess it's easier to do by month. To pay a dollar more you earn $6.50 more per month, and 32% of 6.50 is 2.08 more in monthly benefit. Vs $12 more dollars a year in the IRA, seems ss wins? E2 Which is more at catastrophic risk of being worthless in 30 years? Epitope fucked around with this message at 21:51 on Oct 26, 2022 |
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Oct 26, 2022 18:45
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I love that the SS benefit crisis comes down to asking "who will pay for this thing that benefits baby boomers," and the answer is, as with so many things, "not the baby boomers."
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Oct 26, 2022 21:14
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Is there any inherent risk of putting my money into a brokered CD over a standard bank CD? I have money I want to park and it seems like I can pull the money out with some penalty if I really need it to. Also FDIC insured. I’m looking at Fidelity’s offerings. Can I assume there was some kind of vetting or is it just a list thrown up there?
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Oct 26, 2022 21:16
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Strong Sauce posted:Is there any inherent risk of putting my money into a brokered CD over a standard bank CD? I have money I want to park and it seems like I can pull the money out with some penalty if I really need it to. Also FDIC insured. I’m looking at Fidelity’s offerings. Can I assume there was some kind of vetting or is it just a list thrown up there? Never looked at these myself but wouldn't they just be treasuries with extra steps? I can't imagine the rates being much different from treasuries.
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Oct 26, 2022 22:05
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Strong Sauce posted:Is there any inherent risk of putting my money into a brokered CD over a standard bank CD? I have money I want to park and it seems like I can pull the money out with some penalty if I really need it to. Also FDIC insured. I’m looking at Fidelity’s offerings. Can I assume there was some kind of vetting or is it just a list thrown up there? Vanguard specifically calls out that all of their brokered CDs are issued by FDIC insured banks that also pass an additional credit quality test. Not sure what that test is but as long as you buy less than $250k you should be covered by the FDIC. ETA: also, yes it is treasures with extra steps but looking at Vanguards website again there’s only a few 2023 maturity treasuries with quantities less than like $100k, CDs typically trade in $1k increments. tumblr hype man fucked around with this message at 16:26 on Oct 27, 2022 |
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Oct 27, 2022 16:22
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I was speaking with my parents (both US citizens residing in Germany) and my mother lamented that they are blocked from using US brokerages and investing in US markets due to their geographic location. My question is: even if they reside abroad shouldn't it still be legal for them to use a US based brokerage? This should be easily solved by using a VPN correct?
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Oct 27, 2022 18:07
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General Probe posted:I was speaking with my parents (both US citizens residing in Germany) and my mother lamented that they are blocked from using US brokerages and investing in US markets due to their geographic location. My question is: even if they reside abroad shouldn't it still be legal for them to use a US based brokerage? This should be easily solved by using a VPN correct? I believe you need a US residence to open US brokerage accounts due to legal restrictions.
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Oct 27, 2022 18:12
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Just from some googling it seems like SOME brokerages may allow SOME foreign customers but not all. I assume there are all sorts of “know your customer” and tax compliance issues that banks may not want to have to deal with.
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Oct 27, 2022 18:16
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General Probe posted:I was speaking with my parents (both US citizens residing in Germany) and my mother lamented that they are blocked from using US brokerages and investing in US markets due to their geographic location. My question is: even if they reside abroad shouldn't it still be legal for them to use a US based brokerage? This should be easily solved by using a VPN correct? No. Banks generally don't want to deal with non-us residents. It's not worth the trouble. Lying about LYC when opening an account is a good way to end up in the poo poo. You can look for a brokerage that is willing to deal with this and if your parents have private banking kind of money this won't be a problem. If they are investing their upper middle class retirement portfolio it's going to be basically impossible.
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Oct 27, 2022 18:18
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So being a US citizen doesn't factor in to this at all in terms of how the banks operate but from a legal standpoint if they have a US mailing address (for example mine or my grandfather's) would they be able to. My father is retired with pension and my mother works part time but they are far from high income. I suspect there are tax implications for their country of residence (Germany) that would probably make this a not really viable idea. Edited this post, original is quoted below. Thanks for the input! General Probe fucked around with this message at 18:24 on Oct 27, 2022 |
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Oct 27, 2022 18:18
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General Probe posted:Is claiming an address in the US not enough? Ie, could they not use my home address for this purpose or is an actual ongoing presence in the US required? Making false statements to circumvent federal regulations is not in fact a good idea. Especially with what is presumably your retirement money. Crazy, huh?
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Oct 27, 2022 18:21
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Are you taking notes on a criminal loving conspiracy?!?
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Oct 27, 2022 19:47
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