Our Ridiculous Approach to Retirement

[MadImmortalMan]

I'd just diversify my savings if I had to take a public pension. I'd start up an IRA or something on the side, buy some real estate, etc.


Edit: Annuities too! 

[Admiral Yi]

What MIM said DGuller.  You don't need to insure 100% of the probability distribution.  The bottom .0001% means we're living on rats and dodging fallout anyway. 

[alfred russel]

I think he might be right to do so.   

You still need to worry about counterparty risk. 

And inflation (unless that is built in).

[DGuller]

What MIM said DGuller.  You don't need to insure 100% of the probability distribution.  The bottom .0001% means we're living on rats and dodging fallout anyway.

I didn't say you had to, there is always a risk of ruin, even the best insurance companies are expected to go bust once in 100 or 200 years.  I'm just saying that in Beeb's case, even insuring up to an acceptable risk margin may be just too cost-prohibitive.  He can't just take some of his eggs from his only basket, and put them in another basket.  He would have to obtain another basket and another pile of eggs.

[Barrister]

What MIM said DGuller.  You don't need to insure 100% of the probability distribution.  The bottom .0001% means we're living on rats and dodging fallout anyway.

I didn't say you had to, there is always a risk of ruin, even the best insurance companies are expected to go bust once in 100 or 200 years.  I'm just saying that in Beeb's case, even insuring up to an acceptable risk margin may be just too cost-prohibitive.  He can't just take some of his eggs from his only basket, and put them in another basket.  He would have to obtain another basket and another pile of eggs.

As we've seen, the risks of government insolvency and financial institution insolvency can be intertwined.

[MadImmortalMan]

As we've seen, the risks of government insolvency and financial institution insolvency can be intertwined.

You can still put some savings into overseas things. Buy a couple houses and rent them out. Government insolvency won't make a house disappear, and people still need to live somewhere.

[DGuller]

What MIM said DGuller.  You don't need to insure 100% of the probability distribution.  The bottom .0001% means we're living on rats and dodging fallout anyway.

I didn't say you had to, there is always a risk of ruin, even the best insurance companies are expected to go bust once in 100 or 200 years.  I'm just saying that in Beeb's case, even insuring up to an acceptable risk margin may be just too cost-prohibitive.  He can't just take some of his eggs from his only basket, and put them in another basket.  He would have to obtain another basket and another pile of eggs.

As we've seen, the risks of government insolvency and financial institution insolvency can be intertwined.

That's a very good point as well.  The concept of diversification is actually widely misunderstood.  Diversification doesn't do a thing about general clusterfucks, it's only insurance against individual fuck-ups.

[KRonn]

I had thought Soc Security was in more trouble, listening to some political and other pundits, non-ideological types, like the Simpson-Bowles committee. But it's apparently doing ok, or well enough, through about the 2030s. And even then it's projected to just go into a small deficit but which will widen over time.

However, I do worry about the huge govt deficits and how that may impact all the govt programs, like Medicare, Soc Sec, and more. I do think we should be making some reforms over all, with all programs and spending, reforms, not trashing them.

The tax breaks they gave us, "Bush" tax cuts, come out of Social Security, which doesn't make sense to me really. If they want to do tax cuts, they should be done otherwise. But I guess there would be issues over what ever was targeted anyway.

[Monoriu]

I pulled out the calculator to see how I am doing with the 20 rule. 

I was horrified. 

Then I remember that, in addition to what I have saved throughout the years, I still have my inflation adjusted pension, guranteed by the trillions of cash reserves of the nearly debt free HK government, which run gigantic supluses (the record was 50% of annual expense) year after year. 

Then I remember that my wife has the same. 

And I note that we are both still working. 

[Neil]

Remember Mono that if there's a banking crisis in China (and there will be), all the money in HK will be seized.  Don't neglect your savings.

[MadImmortalMan]

Remember Mono that if there's a banking crisis in China (and there will be), all the money in HK will be seized.  Don't neglect your savings.

Why do you think all those Chinese dudes are investing in properties nobody lives in? Heh.

[Monoriu]

Remember Mono that if there's a banking crisis in China (and there will be), all the money in HK will be seized.  Don't neglect your savings.

All the money in HK is negligible when compared with the wealth on the mainland.  We can't save them 

[Neil]

Remember Mono that if there's a banking crisis in China (and there will be), all the money in HK will be seized.  Don't neglect your savings.

All the money in HK is negligible when compared with the wealth on the mainland.  We can't save them 

Why would that stop them from robbing you?  Did the irrelevance of the public sector unions in the US vis-a-vis the budget save them?

[Admiral Yi]

Why would that stop them from robbing you?  Did the irrelevance of the public sector unions in the US vis-a-vis the budget save them?

  Public sector unions *are* the state budgets.

[Monoriu]

My primary complaint about the private retirement savings account is the high fees.  I think if the government forces its citizens to save in the private accounts (as in the case of HK), there should be a government-managed "default" fund (or funds) for people to choose.  These should be passively managed, low fee, well-balanced portfolios that aim to deliver consistent (but not necessarily high) returns.